STSM091060 - Partnerships: Partnerships and partnership interests: transfer of a partnership interest - example

This example illustrates the content of STSM091050. Ms X increases her partnership share in the XYZ partnership from 10 per cent to 20 per cent. She pays cash consideration to the other partners of £1m. The partnership property includes:

• a chargeable interest in land with a market value of £10m, with an associated mortgage of £6m outstanding, and
• stock and marketable securities with a market value of £5m with no associated borrowing.

Applying paragraph 32 of FA03/SCH15, the consideration is reduced by the excluded amount calculated as follows.

Excluded amount = (£10m − £6m) × 10% = £400,000

This would give a reduced consideration for stamp duty purposes of £600,000 and stamp duty (at 4 per cent) of £24,000, prior to considering the effect of paragraph 33.

The paragraph 33 cap would be:

Maximum stamp duty equals 0.5% × £5m × 10% = £2,500

So the stamp duty chargeable would be £2,500.