STSM021270 - Scope of stamp duty on shares: stamp duty: basics of a charge: transfer of an interest in a partnership
An instrument that evidences the transfer of a partnership interest, whether effecting a change in the relative interests of existing partners or the acquisition of an interest by an incoming partner, is liable to Stamp Duty聽by reference to paragraphs 31 to 33 of Schedule 15 FA2003.
The legislation states that such instruments should be formally adjudicated in accordance with section 12 SA1891 in order to be duly stamped (see STSM022050).
The Stamp Duty charge arises if the partnership assets include stock or marketable securities. The proportion of the value of those assets that is subject to charge is the same as the proportion of the change in the partnership interests.
An interest in a partnership is neither stock nor a marketable security. A transfer of a partnership interest therefore strictly attracts Stamp Duty at the rates applicable to general property (that is, from 1% to 4%, depending upon the amount or value of the consideration). But the amount of Stamp Duty payable is not to exceed the amount that would be chargeable if the instrument of transfer had been one transferring the underlying stock or marketable securities.
Example 1
A partnership has various assets which include shares worth 拢1 million. The partnership itself is valued at 拢20 million. One of the existing partners sells his 10%聽interest in the partnership to an incoming partner for 拢2 million.
Stamp Duty is calculated as follows:
Appropriate proportion of consideration |
10% |
Net market value of stock or marketable securities included in relevant partnership property |
拢1尘颈濒濒颈辞苍 |
Stamp Duty at 4% on consideration of 拢2 million |
= 拢80,000 |
But聽the charge is restricted to 10% x 拢1尘颈濒濒颈辞苍 x 0.5% |
= 拢500 |
Example 2
As in the example above, but now the partner sells half of his share (5%) to another partner. This time the instrument is chargeable to 拢250 Stamp Duty (5% of 拢1 million聽x 0.5%).
Example 3
As in example 1, but now the partnership has no assets which include stock or marketable securities. The instrument is adjudicated as not chargeable with any Stamp Duty.