Read the original guidance here:
HMRC SDLT: SDLTM34030 – Relevant partnership property – Para 14 (5-5A)

Understanding Property Transfers in Investment Partnerships

When you transfer your interest in a property investment partnership, the nature of the transfer dictates what property is included in the calculation of chargeable consideration. The two types of transfers are known as Type A transfers and Type B transfers. Each type has specific rules about which properties are considered when calculating this chargeable amount.

Type A Transfers

In a Type A transfer of an interest in a property investment partnership, the relevant partnership property comprises every chargeable interest held as partnership property just after the transfer occurs. However, there are certain exceptions. The following are not included:

• Chargeable Interests Related to Transfer: Any chargeable interest that was transferred to the partnership alongside this transfer is not counted.
• Excluded Leases: If a lease falls under Para 15 (which excludes market rent leases), it will also not count as partnership property.
• Non-Economic Interests: Any chargeable interest that does not economically relate to the transferred partnership interest is excluded.

Type B Transfers

For a Type B transfer of an interest in a property investment partnership, the relevant partnership property includes every chargeable interest held as partnership property just after the transfer, with additional exclusions:

• Chargeable interests mentioned in the Type A transfer exceptions are also excluded.
• Chargeable Interests prior to 22 July 2004: Any chargeable interest that was transferred to the partnership on or before this date is not included.
• Election Under Para 12A: If an election has been made concerning any chargeable interest regarding its transfer to the partnership under Para 12A, it will also be excluded.
• Miscellaneous Interests: Any other chargeable interest whose transfer to the partnership does not fall under the criteria listed in Para 10(1)(a)-(c) is not included.

Implications of the Exceptions

The rules surrounding these exceptions have a particular impact. In a Type B transfer, the relevant partnership property includes only those chargeable interests that the partnership acquired in accordance with the rules defined in Para 10(1)(a)-(c). This means that the eligibility of the properties being transferred is determined based on when and how they were acquired by the partnership.

Examples of Chargeable Interests

To clarify the concept of chargeable interests further, let’s consider some examples:

• A property investment partnership had three properties: Property A, Property B, and Property C.
• If Property A was purchased directly by the partnership after 22 July 2004, it would count as a chargeable interest under a Type B transfer.
• If Property B was transferred to the partnership on 21 July 2004, it would not be counted in a Type B transfer because of the date of acquisition.
• Property C, which was transferred alongside Property A and is related to the interest being sold, would also be excluded from the calculation for a Type A transfer.

Understanding how these exceptions work is essential for anyone involved in property investment partnerships. It ensures that all parties are on the same page regarding what assets are considered during the transfer process.

Final Notes on Property Transfers

The overall difference between Type A and Type B transfers revolves around the time of acquisition of the chargeable interests and the specific conditions surrounding their transfer to the partnership. It is crucial to follow these guidelines correctly to avoid potential complications in tax calculations and reporting.

If you need further information or clarification on specific cases, you can always refer back to official resources relevant to property transfers and investment partnerships.