SCHEDULE 41 continued
(2) Where none of the chargeable consideration for the transaction is rent—
(a) paragraphs 10(2) to (5) and 18(2) to (5) do not apply;
(b) the chargeable consideration for the transaction shall be taken to be what it would have been if paragraph 10(2) to (5) had applied or, if greater, what it would have been if paragraph 18(2) to (5) had applied.
(3) Where the whole or part of the chargeable consideration for the transaction is rent—
(a) paragraphs 11 and 19 do not apply;
(b) the chargeable consideration for the transaction shall be taken to be what it would have been if paragraph 11 had applied or, if greater, what it would have been if paragraph 19 had applied.
24 (1) This paragraph applies where—
(a) there is a transaction to which paragraph 18 applies;
(b) immediately before the transaction all the partners are bodies corporate;
(c) the sum of the lower proportions is 75 or more.
(2) Paragraphs 18, 19 and 23 have effect with these modifications.
(3) In paragraph 18, for sub-paragraphs (2) to (5) substitute—
“(2) The chargeable consideration for the transaction shall be taken to be equal to the market value of the interest transferred.”.
(4) In paragraph 18(6), for “sub-paragraphs (2) to (5)” substitute “sub-paragraph (2)”.
(5) In paragraph 19, omit sub-paragraphs (3) and (6) to (8).
(6) In paragraph 19, for sub-paragraph (4) substitute—
“(4) If there is chargeable consideration other than rent, that chargeable consideration shall be taken to be equal to the market value of the interest transferred.”.
(7) In paragraph 19, for sub-paragraph (5)(b) substitute—
“(b) that chargeable consideration shall be taken to be equal to the market value of the interest transferred.”.
(8) In paragraph 23(2)—
(a) for “paragraphs 10(2) to (5) and 18(2) to (5)” substitute “paragraphs 10(2) and 18(2)”;
(b) for “paragraph 10(2) to (5)” substitute “paragraph 10(2)”;
(c) for “paragraph 18(2) to (5)” substitute “paragraph 18(2)”.
(9) Paragraph 20 provides for determining the sum of the lower proportions.
25 (1) Where paragraph 10, 14, 17 or 18 applies, paragraph 1 of Schedule 3 (exemption of transactions for which there is no chargeable consideration) does not apply.
(2) But (subject to paragraphs 26 to 28) this Part of this Schedule has effect subject to any other provision affording exemption or relief from stamp duty land tax.
26 (1) Schedule 6 (disadvantaged areas relief) applies to the transfer of an interest in a partnership that is a chargeable transaction by virtue of paragraph 14 or 17 with these modifications.
(2) For paragraph 3 substitute—
“3 (1) This Part of this Schedule applies to a transfer of an interest in a partnership that is a chargeable transaction by virtue of paragraph 14 of Schedule 15 if every chargeable interest comprising the relevant partnership property is a chargeable interest in relation to land that is wholly situated in a disadvantaged area.
(2) This Part of this Schedule applies to a transfer of an interest in a partnership that is a chargeable transaction by virtue of paragraph 17 of Schedule 15 if the subject matter of the land transfer is a chargeable interest in relation to land that is wholly situated in a disadvantaged area.”.
(3) In paragraph 5, for sub-paragraphs (2) to (4) substitute—
“(2) If the relevant consideration does not exceed £150,000 the transaction is exempt from charge.”.
(4) For paragraph 6 substitute—
“6 (1) This paragraph applies where the land is partly non-residential property and partly residential property.
(2) The non-residential proportion of the chargeable consideration for the transaction does not count as chargeable consideration.
(3) The non-residential proportion is the proportion of the market value of the relevant property that, on a just and reasonable apportionment, is attributable to land that is non-residential property.
(4) If the relevant consideration does not exceed £150,000, none of the residential proportion of the chargeable consideration counts as chargeable consideration.
(5) The residential proportion is the proportion of the market value of the relevant property that, on a just and reasonable apportionment, is attributable to land that is residential property.”.
(5) For paragraph 7 substitute—
“7 (1) This Part of this Schedule applies to a transfer of an interest in a partnership that is a chargeable transaction by virtue of paragraph 14 of Schedule 15 if—
(a) some (but not all) of the chargeable interests comprising the relevant partnership property are chargeable interests in relation to land that is wholly situated in a disadvantaged area, or
(b) any chargeable interest comprised in the relevant partnership property is a chargeable interest in relation to land that is partly situated in a disadvantaged area and partly situated outside such an area.
(2) This Part of this Schedule applies to a transfer of an interest in a partnership that is a chargeable transaction by virtue of paragraph 17 of Schedule 15 if the subject matter of the land transfer is a chargeable interest in relation to land that is partly situated in a disadvantaged area and partly situated outside such an area.
(3) In this Part—
(a) references to the disadvantaged-area proportion are to the proportion of the market value of the relevant property that, on a just and reasonable apportionment, is attributable to land situated in a disadvantaged area;
(b) references to the advantaged-area proportion are to the proportion of the market value of the relevant property that, on a just and reasonable apportionment, is attributable to land that is situated outside a disadvantaged area.”.
(6) In paragraph 8, for “consideration attributable to the land situated in the disadvantaged area” substitute “disadvantaged-area proportion of the chargeable consideration”.
(7) In paragraph 9, for sub-paragraphs (2) to (4) substitute—
“(2) If the relevant consideration does not exceed £150,000 none of the disadvantaged-area proportion of the chargeable consideration counts as chargeable consideration.”.
(8) For paragraph 10 substitute—
“10 (1) This paragraph applies where the land situated in a disadvantaged area is partly non-residential property and partly residential property.
(2) The non-residential proportion of the disadvantaged-area proportion of the chargeable consideration for the transaction does not count as chargeable consideration.
(3) The non-residential proportion is the proportion of the disadvantaged-area proportion of the market value of the relevant property that, on a just and reasonable apportionment, is attributable to land that is not residential property.
(4) If the relevant consideration does not exceed £150,000, none of the residential proportion of the disadvantaged-area proportion of the chargeable consideration counts as chargeable consideration.
(5) The residential proportion is the proportion of the disadvantaged-area proportion of the market value of the relevant property that, on a just and reasonable apportionment, is attributable to land that is residential property.”.
(9) After paragraph 11 (1) insert—
“(1A) In this Schedule—
“the land transfer” means the transaction that is the land transfer for the purposes of paragraph 17 of Schedule 15;
“the relevant partnership property” has the meaning given by paragraph 14(5) of Schedule 15;
“the relevant property”—
in the case of a transfer of an interest in a partnership that is a chargeable transaction by virtue of paragraph 14 of Schedule 15, means the relevant partnership property;
in the case of a transfer of an interest in a partnership that is a chargeable transaction by virtue of paragraph 17 of Schedule 15, means the subject matter of the land transfer.
(1B) There is a transfer of an interest in a partnership for the purposes of this Schedule if there is such a transfer for the purposes of Part 3 of Schedule 15 (see paragraph 36 of that Schedule).”.
(10) Omit paragraphs 11(2) and 12.
27 (1) Part 1 of Schedule 7 (group relief) applies to—
(a) a transaction to which paragraph 10 applies, and
(b) a transaction that is a chargeable transaction by virtue of paragraph 17,
with these modifications.
(2) In paragraph 3(1)(a), for “the purchaser” substitute “a partner who was a partner at the effective date of the relevant transaction (“the relevant partner”)”.
(3) In paragraph 3(1), for paragraph (b) substitute—
“(b) at the time the relevant partner ceases to be a member of the same group as the vendor (“the relevant time”), a chargeable interest is held by or on behalf of the members of the partnership and that chargeable interest—
(i) was acquired by or on behalf of the partnership under the relevant transaction, or
(ii) is derived from a chargeable interest so acquired,
and has not subsequently been acquired at market value under a chargeable transaction for which group relief was available but was not claimed,”.
(4) In paragraph 3(3), for the words from “the transferee company” to the end substitute “or on behalf of the partnership and to the proportion in which the relevant partner is entitled at the relevant time to share in the income profits of the partnership.”.
(5) In paragraph 3(4), omit the definition of “relevant associated company”.
(6) In paragraphs 4 to 6, for “the purchaser” (wherever appearing) substitute “the relevant partner”.
28 (1) Schedule 8 (charities relief) applies to the transfer of an interest in a partnership that is a chargeable transaction by virtue of paragraph 14 or 17 with these modifications.
(2) In paragraph 1(1), for “A land transaction is exempt from charge if the purchaser is a charity” substitute “A transfer of an interest in a partnership that is a chargeable transaction by virtue of paragraph 14 or 17 of Schedule 15 is exempt from charge if the transferee is a charity”.
(3) In paragraph 1(2)—
(a) for “the purchaser must intend to hold the subject-matter of the transaction” substitute “every chargeable interest held as partnership property immediately after the transfer must be held”;
(b) in paragraphs (a) and (b) for “the purchaser” substitute “the transferee”.
(4) In paragraph 1(3) for “the purchaser” substitute “the transferee”.
(5) In paragraph 2(1), for paragraph (b) substitute—
“(b) at the time of the disqualifying event the partnership property includes a chargeable interest—
(i) that was held as partnership property immediately after the relevant transaction, or
(ii) that is derived from an interest held as partnership property at that time,”.
(6) In paragraph 2(3)(a), for “the purchaser” substitute “the transferee”.
(7) In paragraph 2(3), for paragraph (b) substitute—
“(b) any chargeable interest held as partnership property immediately after the relevant transaction, or any interest or right derived from it, being used or held otherwise than for qualifying charitable purposes.”.
(8) For paragraph 2(4) substitute—
“(4) In sub-paragraphs (1) and (2) an “appropriate proportion” means an appropriate proportion having regard to—
(a) the chargeable interests held as partnership property immediately after the relevant transaction and the chargeable interests held as partnership property at the time of the disqualifying event, and
(b) the extent to which any chargeable interest held as partnership property at that time becomes used or held for purposes other than qualifying charitable purposes.”.
(9) After paragraph 2 insert—
3 (1) There is a transfer of an interest in a partnership for the purposes of this Schedule if there is such a transfer for the purposes of Part 3 of Schedule 15 (see paragraph 36 of that Schedule).
(2) Paragraph 34 (1) of Schedule 15 (meaning of references to partnership property) applies for the purposes of this Schedule as it applies for the purposes of Part 3 of that Schedule.”.
29 Except as provided by—
(a) paragraph 10 (transfer of chargeable interest to a partnership), or
(b) paragraph 14 (transfer of partnership interest: consideration given and chargeable interest held), or
(c) paragraph 17 (transfer of partnership interest pursuant to earlier arrangements),
the acquisition of an interest in a partnership is not a chargeable transaction, notwithstanding that the partnership property includes land.
30 (1) A transaction which is a chargeable transaction by virtue of paragraph 14 or 17 (transfer of partnership interest) is a notifiable transaction if (but only if) the consideration for the transaction exceeds the zero rate threshold.
(2) The consideration for a transaction exceeds the zero rate threshold if either or both of the following conditions are met—
(a) the relevant consideration for the purposes of section 55 (amount of tax chargeable: general) is such that the rate of tax chargeable under that section is 1% or higher;
(b) the relevant rental value for the purposes of Schedule 5 (amount of tax chargeable: rent) is such that the rate of tax chargeable under that Schedule is 1% or higher.
31 (1) Nothing in section 125 (abolition of stamp duty except in relation to stock or marketable securities), or in Part 2 of Schedule 20 (amendments and repeals consequential on that section), affects the application of the enactments relating to stamp duty in relation to an instrument by which a transfer of an interest in a partnership is effected.
(2) In Part 1 of Schedule 20 (provisions supplementing section 125) references to stock or marketable securities shall be read as including any property that is the subject-matter of a transaction by which an interest in a partnership is transferred.
(3) In their application in relation to an instrument by which a transfer of an interest in a partnership is effected, the enactments relating to stamp duty have effect subject to paragraphs 32 and 33.
32 (1) This paragraph applies where—
(a) stamp duty under Part 1 of Schedule 13 to the Finance Act 1999 (transfer on sale) is chargeable on an instrument effecting a transfer of an interest in a partnership, and
(b) the relevant partnership property includes a chargeable interest.
(2) The “relevant partnership property”, in relation to a transfer of an interest in a partnership, is every chargeable interest held as partnership property immediately after the transfer, other than any interest that was transferred to the partnership in connection with the transfer.
(3) The consideration for the transaction shall (subject to sub-paragraph (8)) be taken to be equal to the actual consideration for the transaction less the excluded amount.
(4) The excluded amount is a proportion of the net market value of the relevant partnership property immediately after the transfer.
(5) That proportion is—
(a) if the person acquiring the interest in the partnership was not a partner before the transfer, his partnership share immediately after the transfer;
(b) if he was a partner before the transfer, the difference between his partnership share before and after the transfer.
(6) The net market value of a chargeable interest at a particular date is—
MV - SL
where—
MV is the market value of the chargeable interest at that date, and
SL is the amount outstanding at that date on any loan secured solely on the chargeable interest.
(7) If, in relation to a chargeable interest, SL is greater than MV, the net market value of the chargeable interest shall be taken to be nil.
(8) If the excluded amount is greater than the actual consideration for the transaction, the consideration for the transaction shall be taken to be nil.
(9) Where this paragraph applies in relation to an instrument, the instrument shall not be regarded as duly stamped unless it has been stamped in accordance with section 12 of the Stamp Act 1891.
33 (1) This paragraph applies where—
(a) stamp duty under Part 1 of Schedule 13 to the Finance Act 1999 (transfer on sale) is chargeable on an instrument effecting a transfer of an interest in a partnership, and
(b) the relevant partnership property includes stock or marketable securities.
(2) The relevant partnership property, in relation to a transfer of an interest in a partnership, is the partnership property immediately after the transfer, other than any partnership property that was transferred to the partnership in connection with the transfer.
(3) The stamp duty chargeable on the instrument shall not exceed the stamp duty that would be chargeable if—
(a) the instrument were an instrument effecting a transfer of the stock and marketable securities comprised in the relevant partnership property, and
(b) the consideration for the transfer were equal to the net market value of that stock and those securities immediately after the transfer, less the excluded amount.
(4) The excluded amount is a proportion of the net market value of that stock and those securities immediately after the transfer.
(5) That proportion is—
(a) if the person acquiring the interest in the partnership was not a partner before the transfer, his partnership share immediately after the transfer;
(b) if he was a partner before the transfer, the difference between his partnership share before and after the transfer.
(6) The net market value of stock or securities at a particular date is—
MV - SL
where—
MV is the market value of the stock or securities at that date, and
SL is the amount outstanding at that date on any loan secured solely on the stock or securities.
(7) If, in relation to any stock or securities, SL is greater than MV, the net market value of the stock or securities shall be taken to be nil.
(8) Where this paragraph applies in relation to an instrument, the instrument shall not be regarded as duly stamped unless it has been stamped in accordance with section 12 of the Stamp Act 1891.
(9) This paragraph shall be construed as one with the Stamp Act 1891.
34 (1) Any reference in this Part of this Schedule to partnership property is to an interest or right held by or on behalf of a partnership, or the members of a partnership, for the purposes of the partnership business.
(2) Any reference in this Part of this Schedule to a person’s partnership share at any time is to the proportion in which he is entitled at that time to share in the income profits of the partnership.
35 For the purposes of this Part of this Schedule, there is a transfer of a chargeable interest to a partnership in any case where a chargeable interest becomes partnership property.
36 For the purposes of this Part of this Schedule, there is a transfer of an interest in a partnership where arrangements are entered into under which—
(a) a partner transfers the whole or part of his interest as partner to another person (who may be an existing partner), or
(b) a person becomes a partner and an existing partner reduces his interest in the partnership or ceases to be a partner.
37 For the purposes of this Part of this Schedule, there is a transfer of a chargeable interest from a partnership in any case where—
(a) a chargeable interest that was partnership property ceases to be partnership property, or
(b) a chargeable interest is granted or created out of partnership property and the interest is not partnership property.
38 (1) This paragraph applies in relation to a lease for the purposes of this Part of this Schedule if—
(a) the grant of the lease is or was a transaction to which paragraph 10 applies or applied (or a transaction to which paragraph 10 would have applied if that paragraph had been in force at the time of the grant), or
(b) the grant of the lease is a transaction to which paragraph 18 applies.
(2) In determining the market value of the lease, an obligation of the tenant under the lease is to be taken into account if (but only if)—
(a) it is an obligation such as is mentioned in paragraph 10 (1) of Schedule 17A, or
(b) it is an obligation to make a payment to a person.
39 (1) Section 839 of the Taxes Act 1988 (connected persons) has effect for the purposes of this Part of this Schedule.
(2) As applied by sub-paragraph (1), that section has effect with the omission of subsection (4) (partners connected with each other).
40 In this Part of this Schedule “arrangements” includes any scheme, agreement or understanding, whether or not legally enforceable.”.
2 The following amendments are consequential on the amendment made by paragraph 1—
(a) in section 104(2) of the Finance Act 2003 (c. 14) (partnerships), for the words following “Part 3” substitute “makes special provision for certain transactions”;
(b) in section 125(8) of that Act (continued application of stamp duty in relation to certain partnership transactions), for “paragraph 13(2) and (3)” substitute “paragraph 31”;
(c) in paragraph 5 of Schedule 15 to that Act (partnerships: introduction to Part 2 of Schedule 15), for the words following “Part 3 of this Schedule” substitute “(transactions to which special provisions apply)”.
3 (1) The preceding provisions of this Schedule have effect in relation to any partnership transaction of which the effective date (within the meaning of Part 4 of the Finance Act 2003 (c. 14)) is after the day on which this Act is passed.
(2) “Partnership transaction” means a transaction mentioned in paragraph 9 (1) of Schedule 15 to the Finance Act 2003 (as substituted by paragraph 1 of this Schedule).