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Stamp Duty Land tax and Partnerships

June 2006

If your business has interests in land, and is managed by a professional, trading partnership, you will be pleased by the change in legislation proposed in the Finance Bill 2006.

Two relaxations of the SDLP regulations are included.

1. No SDLT charge on change of partnership sharing ratios.

This charge could have occurred:

  • on the introduction of a new partner,
  • on the departure of an existing partner, or
  • merely by altering the profit sharing ratios.

An SDLT tax charge could have applied on changes in income sharing arrangements even if capital shares stayed the same.

2. Simplified rules when property is added to or removed from a partnership.

The legislation provided that there would be an SDLT charge both on a proportion of the market value of property and on a proportion of the actual consideration, leading to illogical results in some circumstances. Actual consideration will now be ignored in calculating the SDLT charge.

As these proposals will not take effect until the Finance Bill has Royal Assent (probably July 2006) it would be advisable to delay changes in partnerships until the legislation is passed.

If you need to consider the SDLT consequences of moving property into or out of a partnership please call

Hilton Sharp & Clarke