Read the original guidance here:
HMRC SDLT: SDLTM33390 – Partnership Property – Para34(1)

Understanding Chargeable Interests as Partnership Property for SDLT

A chargeable interest can be considered as partnership property for Stamp Duty Land Tax (SDLT) under specific conditions. We will break down what this means and explain how the law applies.

Key Conditions for Chargeable Interests to be Considered as Partnership Property

There are two important criteria that need to be met:

• Held by the Partnership or Members – The chargeable interest must be held by the partnership itself or by individual members on behalf of the partnership.
• Purpose of Partnership Business – The interest must be used for activities related to the partnership’s business.

Both of these conditions must be satisfied for a chargeable interest to qualify as partnership property. Determining whether these criteria apply often requires factual investigation. Typically, a written agreement between partners can clarify this status.

Legal Basis for Defining Partnership Property

The definition of partnership property is anchored in law, specifically referring to the Partnership Act 1890. Here’s how it works:

• If a chargeable interest is acquired for the benefit of the partnership or is directly involved in carrying out the partnership business, it will generally be classified as partnership property for SDLT purposes.

This means that if the property is purchased or obtained to benefit the partnership’s operations, it will be considered partnership property.

Partnership Property vs. Individual Partner Property

It’s important to note that just because a business uses property owned by one or more partners, it does not automatically make that property part of the partnership assets. For example:

• If a single partner owns a property but the business operates from that location, the property is still the individual partner’s, not the partnership’s property.

Similarly, when several partners jointly own a property, whether it is classified as partnership property will depend on how it is owned and the agreements in place about it.

Joint Tenancy and Partnership Property

In most cases in England, Wales, and Northern Ireland, if a chargeable interest is held by partners under a joint tenancy arrangement, it will not be classified as partnership property unless there is clear evidence showing a change of intention. For instance:

• If partners initially decide to hold a property in joint tenancy, they might later agree to treat it as partnership property. Documentation reflecting this change is essential for the new status to apply.

Legislation Reference

Further details on what constitutes partnership property can be found in the Business Income Manual under the section BIM72058. This resource provides additional context and examples related to partnership property and the implications for SDLT.