Read the original guidance here:
HMRC SDLT: SDLTM33100 – Partnerships

Understanding Partnerships in Stamp Duty Land Tax (SDLT): SDLTM33100

What is a Partnership for SDLT Purposes? (SDLTM33110)

A partnership is a group of two or more individuals or entities who come together to conduct business. For the purposes of Stamp Duty Land Tax (SDLT), a partnership is defined by its members and the intention behind their collaboration.

Key points about partnerships in SDLT:

• Members: A partnership can consist of individuals or corporations.
• Business intention: The members must intend to operate a business and share profits.

Example: If two friends pool their money to start a café and share the profits, they form a partnership for SDLT purposes.

The Legal Status of a Partnership (SDLTM33120)

The law typically sees a partnership as a collection of individuals rather than a single entity. This means that the legal personality of the partnership is not recognized in the same way it is for companies.

Key points to remember:

• No separate legal entity: A partnership does not have its own legal identity like a corporation does.
• Members’ responsibilities: Each member is individually responsible for the debts and obligations of the partnership.

Example: If a partnership takes out a loan and cannot repay it, the creditors can pursue the individual partners for repayment, not just the partnership as a whole.

Continuity of the Partnership (SDLTM33130)

Partnerships can face changes, such as a new member joining or an existing member leaving. However, these changes do not usually affect the partnership’s status for SDLT purposes.

Points to consider regarding continuity:

• Ongoing identity: The partnership retains its identity even if members change.
• Legal implications: The incoming or outgoing members may have SDLT obligations when property is transferred.

Example: If one partner in a real estate business leaves, the remaining partners continue operating under the same partnership agreement, and new SDLT assessments may apply if property is involved.

Partnerships Not Falling Under Unit Trust Scheme (SDLTM33140)

Partnerships are distinct from unit trust schemes for SDLT purposes. This means they have different rules and implications when it comes to tax matters.

Important distinctions include:

• Unit trust characteristics: A unit trust raises money from investors and pools that money to buy property. This is different from how partnerships operate.
• Tax liabilities: Partnerships are taxed differently than unit trusts, which can affect the financial responsibilities of the members.

Example: If a group of investors forms a unit trust to invest in property, the rules surrounding SDLT for unit trusts will apply, which differ from those that apply to a traditional partnership investing in similar assets.