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Strange rules, beyond understanding
Key points
- Inheritance tax solutions may trigger SDLT problems.
- The measure of a person’s interest in a partnership for SDLT purposes is by reference to income rather than capital sharing ratios.
- Watch out for aunts uncles nephews nieces and cousins. If they are partners the connected persons rules will not apply and so SDLT may be chargeable on transfers.
- Withdrawal of capital within three years may trigger SDLT charges.
- Watch out for future changes in profit sharing ratios – they could spring a nasty surprise.
One of the enjoyable things about tax work is occasionally being able to save someone a lot of money with one or two sheets of paper. A good example is in relation to IHT business property relief – see Example 1.
This dichotomy in business property rules is somewhat strange and the rationale for it is...
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