Read the original guidance here:
HMRC SDLT: SDLTM33000 – Application: Partnerships – Partnerships: FA03/SCH15

Understanding Stamp Duty Land Tax (SDLT) Legislation for Partnerships

The rules for Stamp Duty Land Tax (SDLT) that affect partnerships are primarily found in Schedule 15 (Sch 15). This guidance will help you understand the key ideas, principles, and concepts related to this legislation.

It is important to note that this guidance applies to transactions that took effect on or after 21 July 2008, which is when the Finance Act 2008 (FA08) came into force. If your transaction occurred before this date and you need further advice, please reach out to the Technical Team. You can find their contact details on the official HMRC website.

Overview of Schedule 15

Schedule 15 is divided into three main sections:

• Part 1: Definitions and continuity of partnerships
• Part 2: Ordinary partnership transactions
• Part 3: Transactions with special provisions

Part 1: Understanding Partnerships

This part of Schedule 15 defines what a partnership is for SDLT purposes. It outlines:

• The criteria that make up a partnership.
• When the partnership is considered to continue under SDLT regulations.
• Other related matters regarding partnerships.

For more details about these definitions, refer to SDLTM33100.

Part 2: Ordinary Partnership Transactions

This section deals with the rules for what are called “ordinary partnership transactions.” Essentially:

• This part uses the main SDLT rules for transactions carried out by or on behalf of the members of a partnership when they act as purchasers.
• “Ordinary partnership transactions” encompass all transactions not covered by Part 3 of Schedule 15.

For more information on ordinary partnership transactions, see SDLTM33200.

Example of an Ordinary Partnership Transaction

Suppose two individuals, Sarah and John, are partners in a real estate business. They decide to purchase a commercial property in their partnership’s name. This transaction falls under the rules described in Part 2 because it is directly related to their partnership’s activities and is not specifically exempted or subject to special rules in Part 3.

Part 3: Special Provisions for Specific Transactions

Part 3 outlines the rules that apply to transactions that have specific provisions. Most of the guidance in this area focuses on these transactions. This part will typically cover situations that require tailored rules due to their complexity or nature.

• This section applies to special types of partnership transactions that differ from ordinary transactions.
• It is important to identify whether a transaction is covered by these special rules to ensure proper compliance with SDLT obligations.

For more information on these special provisions, visit SDLTM33300.

Example of Special Provisions

Consider a scenario where Sarah and John decide to merge their partnership with another partnership to form a larger entity. The transfer of assets during this merger may qualify as a transaction under Part 3 due to its special conditions. The regulations surrounding how SDLT applies in this case would be different from the rules that govern their previous property purchase as an ordinary transaction.

Key Considerations for Partnerships Involved in SDLT Transactions

When partnerships engage in transactions that involve Stamp Duty Land Tax, they should consider the following:

• Partnership Structure: The legal structure of the partnership (for example, limited liability partnership versus traditional partnership) may affect the applicability of SDLT.
• Effective Date of Transactions: The date when the transaction takes place is crucial. Ensure that you are compliant with SDLT requirements relevant to the effective date.
• Documentation: Proper documentation must be maintained for all transactions to evidence the SDLT position, especially for those transactions that may fall under ordinary or special rules.
• HMRC Guidelines: Always refer back to HMRC guidelines and updates, as SDLT regulations can change.

Conclusion

Understanding the structure of Schedule 15 is essential for partnerships involved in SDLT transactions. From defining what constitutes a partnership to discerning between ordinary transactions and those with special provisions, navigating the SDLT landscape requires diligence and awareness of the relevant regulations. For additional details on each section and transaction types, please consult the respective SDLT guidance references revealed above.