Budget Notes

BN58 STAMP DUTY LAND TAX (SDLT): ANTI-AVOIDANCE LEGISLATION AFFECTING PARTNERSHIPS

Who is likely to be affected?

1. Property investment partnerships that purchase interests in property in the United Kingdom.

General description of the measure

2. Legislation will be introduced in Finance Bill 2008 to amend provisions inserted in Finance Act (FA) 2003 by FA 2007 to ensure that, where there is a transfer of an interest in a property within an investment partnership, there will be no charge to SDLT.

Operative date

3. The measure will be retrospective and have effect for transactions that occurred on and after 19 July 2007 (the date that Finance Bill 2007 received Royal Assent).

Current law and proposed revisions

4. Legislation in FA 2007 tackled schemes which allowed payment of SDLT to be avoided by using provisions in the then existing SDLT legislation intended to help the transfer of property between different partners within an investment partnership. The following parts of SDLT legislation within the Finance Act 2003 were amended:

•    the charge on transfers into partnerships set out in paragraphs 10-12 of Schedule 15;

•    the charge on transfers out of partnerships set out in paragraphs 18-20 of Schedule 15; and

•    the charge on transfers of an interest in a property-investment partnership set out in paragraph 14 of Schedule 15.

5. The legislation in FA 2007 affected property investment partnerships by ensuring that each time there was a change in the size of share held within the property investment partnership there was a charge for SDLT regardless of whether there was any consideration paid for the change and regardless of whether the parties involved in the transaction were connected to each other in any way. Previously, provisions in SDLT legislation to help ease the movement of property between partners had been used to relieve these transactions of the charge to SDLT that would have been due on transactions involving transfers between partners.

6. The legislation in Finance Bill 2008 will amend the provisions in FA 2003 inserted by FA 2007 in order to ensure that where there is a transfer of an interest in a property within an investment partnership, there will be no charge to SDLT.

Further advice

7. If you have any questions about this measure, please contact Michael Lyttle on 020 7147 2792 (email: michael.lyttle@hmrc.gsi.gov.uk). Information about Budget measures is available on the HM Revenue & Customs website at www.hmrc.gov.uk