SDLT Partnership Relief
When a transfer of interest happens within a property investment partnership, the property transfer may be classed as a land transaction. In these cases, it may be exempt from Stamp Duty. 1 in 3 overpay HMRC in Stamp Duty. Read on to find out if you could be one of them.
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What is Partnership Stamp Duty Relief?
When a chargeable interest is transferred from a person to a limited liability partnership in connection with its incorporation, the purchaser (the partnership), may be exempt from Stamp Duty. If a new partner joins an existing partnership, the transfer of property to the partnership may also be exempt from Stamp Duty. This is known as Partnership Relief.
What is the eligibility criteria for Stamp Duty Partnership Relief?
The date of the transaction is within 1 year from the date of incorporation of the limited liability partnership
The transferor is a partner in a partnership comprised of all the persons who are members of the limited liability partnership
OR
Holds the chargeable interest transferred as nominee or bare trustee for one or more of the partners
What is a Limited Liability Partnership?
A limited liability partnership is one formed under the Limited Liability Partnerships Act 2000 or the Limited Liability Partnerships Act (Northern Ireland) 2002.
It is a type of legal business entity that combines the benefits of a company and a partnership.
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What transaction types are covered by Partnership Relief?
The transfer of properties between partners.
The transfer of properties to a partnership.
Examples
01
Example of a property investment partnership
A partnership rents several houses in multiple occupations as a commercial undertaking.
The partners spend a significant amount of time managing the tenants, collecting rent and undertaking repairs.
This is a property investment partnership.
02
Example of an exempt property transfer
A, B and C are equal partners in a property investment partnership.
D, a charity, want to become a partner. When becoming a partner, D’s properties will become part of the partnership’s portfolio and vice versa.
D does not have to pay Stamp Duty if all the land and property held by the partnership after D joins is held for qualifying purposes.
Claiming partnership property Stamp Duty relief
Property transfers into the partnership must be held for qualifying purposes to be deemed eligible for relief. Partners must continue to use the property for qualifying purposes up to 3 years after the transaction.
If not, the relief is withdrawn. In these cases, the amount of Stamp Duty that should have been charged at the time of purchase must be paid.
When a partnership transfer does not meet the requirements for an exemption from Stamp Duty, it must be paid. This is known as the “chargeable consideration”. This is calculated as a proportion of the market value of the relevant partnership property.
Incorporation Relief is provided when you transfer your business to a company in return for shares. You still pay tax on the transfer, but only when you sell the shares.
Partnership Relief is different as it provides permanent relief from paying Stamp Duty. To qualify, you must transfer qualifying properties into a partnership and continue to use the property for its intended purposes for up to 3 years.
Are you owed thousands in Stamp Duty?
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Are you owed thousands in Stamp Duty?
FAQ's about Partnership Relief
Partnerships do not pay Stamp Duty on the transfer of property or land when the transaction meets certain conditions. This is usually when a new partner is joining a partnership or when a property is transferred to a partnership. The transfer must happen within 1 year of the partnership coming together as a Limited Liability Partnership to qualify. Other conditions also apply.
When Stamp Duty Land Tax (SDLT) is charged for the transfer of a partnership interest, the amount of tax payable is based on a proportion of the market value of the partnership property involved in the transaction. The actual price paid for the partnership interest is not considered when calculating the SDLT due.
A company, property trader, group body, or partnership transaction may qualify for Stamp Duty Relief if certain conditions are met. For example, if companies are all part of the same group, the transfer of property will be exempt from Stamp Duty. Or if a property trader purchases a probate property or a chain break home, they will be exempt from Stamp Duty.
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Paul EdwardsI reached out to StampDuty.com in August to discuss a purchase I made last year.
The property was in a bad state of repair, lots needed doing. When StampDuty.com gathered the documents and images of the property, they let me know I could save roughly £40,000. This seemed amazing but i was sceptical, why didn't my lawyer point this out. After many reassuring conversations and pointing to legislation to explain their answers, we pushed ahead.
I am pleased to say I received my refund at the end of October! I just want to thank Joe and the team for all of their hard work and the fast turnaround.