SDLT Relief and Property Partnership

I act for H and W who each own two mortgaged properties. They have been advised by their FA to transfer the properties into joint ownership as part of a refinancing exercise and the eventual transfer of their buy to let business to a limited company. The bank with which they are refinancing will not agree to each of them making a Declaration of Trust for each property with an indemnity in relation to the mortgage to avoid SDLT surcharge. FA has suggested H and W establish a partnership with each contributing their respective properties (and mortgages) and each retaining their respective interests and 100% SDLT relief would apply. Do any forum members agree?

Paula Hopkins
Wilkins Solicitors

Paragraph 10, Sch 15 FA2003 gives relief from an immediate SDLT charge where husband and wife introduce properties into a partnership, however I would expect the terms of the mortgage to require the notification and consent of the banks in any case.

The risk with creating a partnership intending to transfer the properties on to a limited company is that s.75A (and possibly para 17A, Sch 5) will look through the transaction and impose full SDLT on the incorporation of the properties.

Stuart Maggs
Howes Percival LLP