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HMRC internal manual

Stamp Duty Land Tax Manual

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HM Revenue & Customs
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Special provisions relating to partnerships: Stamp Duty implications of Schedule 15

Although FA03/Sch15 relates specifically to Stamp Duty Land Tax (SDLT), where there is a transfer of a partnership interest there can be Stamp Duty (SD) as well as SDLT implications.

Para 31-33 deal with these implications. Para 31 specifically excludes transfers of partnership interests from the abolition of SD contained within FA03/S125 and Sch20. Section 12 Stamp Act 1891 Para 32(9) and 33(8) require adjudication of all instruments which transfer a partnership interest, even if neither SDLT or SD is payable.

There is a potential SD charge when there is an instrument which transfers a partnership interest and the relevant partnership property includes stock or marketable securities. This is similar to the SDLT charge on transfers of a partnership interest, but is limited to:

* the lower of the chargeable consideration (less any excluded amount), or
* the market value of the appropriate portion of chargeable stocks and marketable securities which are partnership assets.

The excluded amount is a proportion of the net market value of the relevant partnership property immediately after the transaction (Para 32(4)).

That proportion is-

  1. if the person acquiring the interest in the partnership was not a partner before the transfer, his partnership share immediately after the transfer;
  2. if he was a partner before the transfer, the difference between his partnership share before and after the transfer (para32(5).

The net market value at a particular date is-

MV - SL

Where -

  1. MV is the market value of the chargeable interest at that date, and
  2. SL is the amount outstanding at that date on any loan secured solely on the chargeable interest (Para 32(6)).

If, in relation to a chargeable interest, SL is greater than MV, the net market value of the chargeable interest shall be taken to be nil (Para32 (7)).

The relevant partnership property in relation to a transfer of an interest in a partnership is every chargeable interest held as partnership property immediately after the transfer, other than any interest that was transferred to the partnership in connection with the transfer (para32(2)).

Where there is no relevant partnership property comprising of stock or marketable securities there is no charge to SD (Para 33(1)).

Where the relevant partnership property does comprise of stock or marketable securities any SD payable shall not exceed that which would have been chargeable if-

  1. the instrument were an instrument effecting the transfer of that stock and marketable securities, and
  2. the consideration for the transfer were equal to the appropriate proportion of the net market value of that stock and those securities immediately after the transfer (Para 33(3)).

The appropriate proportion is-

  1. if the person acquiring the interest in the partnership was not a partner before the transfer, his partnership share immediately after the transfer;
  2. if he was a partner before the transfer, the difference between his partnership share before and after the transfer (para33(5)).

The net market value of stock or securities at a particular date is-

MV - SL

Where -

  1. MV is the market value of the stock or securities at that date, and
  2. SL is the amount outstanding at that date on any loan secured solely on the stock or securities (Para 33(6)).

If, in relation to any stock or securities, SL is greater than MV, the net market value of the stock or securities shall be taken to be nil (Para 33(7)).

The relevant partnership property in relation to a transfer of an interest in a partnership is the partnership property immediately after the transfer, other than any partnership property that was transferred to the partnership in connection with the transfer (Para33(3A)).