HMRC SDLT: Exemptions and Reliefs for Partnerships in Disadvantaged Areas and Mixed-Use Properties
Special Provisions for Partnerships in Disadvantaged Areas
This section outlines the special provisions for partnerships concerning exemptions and reliefs when dealing with land transfers in disadvantaged areas. It specifies conditions under which certain transactions are exempt from Stamp Duty Land Tax (SDLT), particularly focusing on the nature and location of the land involved.
- All partnership property must be in a disadvantaged area for para14 to apply.
- Para17 applies when the land transfer involves a chargeable interest wholly in a disadvantaged area.
- If the land is entirely residential and the consideration is £150,000 or less, the transaction is exempt from SDLT.
- For mixed-use land, the residential part is assessed separately, and if its consideration is £150,000 or less, it is not counted as chargeable consideration.
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HMRC SDLT: Exemptions and Reliefs for Partnerships in Disadvantaged Areas and Mixed-Use Properties
Understanding Special Provisions for Partnerships and SDLT Exemptions and Reliefs
When dealing with Stamp Duty Land Tax (SDLT) in the context of partnerships, there are specific rules and exemptions that apply. This guidance outlines the main principles and conditions that need to be understood when determining if SDLT can be exempted or relieved for partnerships.
Key Terms and Definitions
- Partnership Property: This refers to any property owned by a partnership, which might be subject to SDLT when transferred.
- Chargeable Interest: This is a legal term for rights in land that can be charged by SDLT. It generally includes ownership or leasehold interests in property.
- Disadvantaged Area: This is a specific zone identified by the government as needing economic support. Properties located in these areas can qualify for special treatment under SDLT rules.
- Relevant Chargeable Consideration: This is the amount that has to be considered for SDLT. It includes money paid for the property and other valuable considerations.
Eligibility for Exemptions
There are specific criteria that must be met for a partnership’s property to qualify for SDLT exemptions or reliefs. Below are outlined paragraphs from the regulations that explain when these exemptions might apply:
1. Applications of Para 14
- According to paragraph 14 of the guidance, all property that is part of a partnership and subject to a charge must be located in a disadvantaged area. This is further detailed in paragraph 26(2).
2. Applications of Para 17
- Under paragraph 17, if the land being transferred is a chargeable interest and is entirely situated in a disadvantaged area, then the rules set out in paragraph 26(2) apply.
3. Exemptions for Residential Property
- If all the land involved in a transaction is residential, the rules from FA03/Sch6/para5 come into play. If the relevant chargeable consideration is not more than £150,000, the transaction is exempt from SDLT.
4. Mixed-Use Properties
- When the property includes both residential and non-residential parts, the residential portion needs to be assessed fairly. If the chargeable consideration for the residential section, proportionally calculated, does not exceed £150,000, then this part of the consideration is not considered when calculating SDLT under Schedule 15 (refer to para 26(4)).
Example Scenarios
Here are some example situations that illustrate how these rules work in practice:
- All Residential Property in a Disadvantaged Area: A partnership owns a block of flats in a disadvantaged area. If the sale price of the flat block is £145,000, since it is wholly residential and below the £150,000 threshold, SDLT does not apply.
- Mixed Use Property (Residential and Non-Residential): Suppose a partnership sells a property which consists of a small shop on the ground floor and a flat above. If the total value of the property is £200,000, and the residential flat is valued at £140,000 proportionally, then only the residential portion needs to be considered for SDLT. Since £140,000 is under the £150,000 limit, that part would be exempt, while the SDLT liability may apply only to the non-residential portion.
- Entirely Non-Residential Property: If a partnership transfers a commercial office situated in a disadvantaged area, SDLT will apply to the full value of the property, as the exemptions only cover residential properties.
Procedures for Claiming Relief
To claim reliefs and exemptions under these provisions, partnerships must ensure that they follow the correct procedures:
- Fill out the relevant SDLT forms accurately, ensuring that all information regarding the property type and chargeable interests is clear.
- Include appropriate documentation that serves as evidence of the disadvantaged area status and any relevant property valuations.
- Submit the SDLT return and payment (if applicable) within the set timeframes to avoid penalties.
Important Considerations
It’s essential to keep the following points in mind when navigating partnerships and SDLT:
- Always check if the property qualifies as being located in a disadvantaged area as the first step in evaluating SDLT obligations.
- Carefully assess the residential and non-residential value split, especially for mixed-use properties, to determine potential exemptions accurately.
- Utilize professional advice if necessary, as the nuances of property law and taxation can be complex and subject to change.
Further Information and Resources
Partnerships must stay informed about changing regulations and guidance on SDLT. For specific queries and more detailed guidance, partnerships may refer to the official HMRC website or consult tax professionals.
If you need specific guidance on SDLT in partnership transactions, please visit the following link for more information: SDLTM34250 – Special provisions relating to partnerships: Application of exemptions and reliefs.
Useful article? You may find it helpful to read the original guidance here: HMRC SDLT: Exemptions and Reliefs for Partnerships in Disadvantaged Areas and Mixed-Use Properties
