Read the original guidance here:
HMRC SDLT: SDLTM33720 – Chargeable consideration – Para18(2)

Understanding Chargeable Consideration under Para18

When a partnership transfers a chargeable interest, the chargeable consideration is based on the market value of the interest being transferred. This is a key aspect of the rules set out in Para18.

What is Chargeable Consideration?

Chargeable consideration refers to the value that is considered when calculating the stamp duty land tax (SDLT) due on a property transfer. It includes:

• The amount paid for the property.
• Any additional values that are part of the transaction.

Calculating Chargeable Consideration under Para18

When applying Para18 to the transfer of a chargeable interest from a partnership, you need to calculate chargeable consideration as a portion of the market value of the interest being transferred. Here’s how to do it:

• First, identify the SLP, which stands for the ‘sum of the lower proportions’.
• The proportion is computed as (100 – SLP) %.

This calculation helps determine the chargeable consideration for the purchaser, or the individual receiving the property from the partnership.

When to Consider Other Provisions

If the chargeable interest is being transferred from a partnership made up entirely of companies, you’ll also need to look at the rules outlined in Para24. For more information, visit SDLTM33840.

In circumstances where a chargeable interest is moving from one partnership to another, both Para18 and Para10 might apply. In these cases, you should refer to the provisions in Para23 as well. See SDLTM33810 for details.

Terminating a Partnership

A charge under Para18 will also apply when a partnership is dissolved and the assets are distributed among the former partners.

For this situation, it’s important to note that property that was considered partnership property before the partnership ended is still regarded as partnership property until it is actually distributed. This is highlighted in Para18(7).

Additional Rules to Consider

Keep in mind that the provisions of Para18 are subject to any election under Para12A. For more guidance on this, you can refer to SDLTM34060.

Conclusion

This overview of Para18 sets out how chargeable consideration is calculated when a partnership transfers property. By understanding these rules and how to apply them, you can navigate the complexities of SDLT with greater ease.