Is there charge to SDLT when a share in partnership property is transferred on a partner’s retirement?

“I am acting for a Doctors’ Practice comprising three property owning partners and one non-property owning. The property-owning partners are WH, SP and PT. WH is retiring. The Surgery premises are being transferred by WH, SP and PT to SP and PT. The Transfer says there is no monetary consideration.  The Surgery premises are subject to a Bank Mortgage. The Bank is releasing WH from his Mortgagor/Borrower covenants by a Deed of Variation of Partnership Mortgage.

If there has been an extension to the original Surgery premises and the Partnership Agreement refers to shares in the original premises as A Shares and shares in the extension as B Shares. If it is of relevance, once WH has retired and transferred his interest in the Surgery premises, the A Shares will be held half and half by SP and PT. The B Shares will total 19.5 with SP owning 6.5 of such shares, PT 7 and the non-property owning partner 6 shares.

I would like a view on whether there is any liability to Stamp Duty Land Tax bearing in mind that the Transfer of Surgery premises is being made in consideration of WH being released from his covenants under the Bank’s Legal Charge.

The view of the Practice Accountants is that SDLT would not be due as the property is a partnership asset and removing WH as a property partner “does not constitute a transfer or any chargeable consideration as the property is held within the partnership.”

Source: BLG Member 


As the land will remain partnership property (as defined in paragraph 34(1) Schedule 15 FA 2003) there will be no charge to SDLT. Changes in partners or in partnership shares do not give rise to a charge to SDLT unless the partnership is a property investment partnership.

At the time of publication this response was correct however as tax legislation and practice change from time-to-time you should take specific advice before taking any action.

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