LBTT3034 - Relief for incorporation of limited liability partnership

LBTT guidance on tax relief where a chargeable interest transfers from a person to a limited liability partnership in connection with its incorporation.

This relief is provided by the provisions of schedule 12 to the LBTT(S)A 2013.

Description of relief

This relief may be claimed on a transaction which transfers a chargeable interest from a person (the transferor) to a limited liability partnership in connection with its incorporation, if certain conditions are met.

A limited liability partnership means one formed under the Limited Liability Partnerships Act 2000 or the Limited Liability Partnerships Act (Northern Ireland) 2002.

Relief conditions

The four conditions are:

  1. that the effective date of the land transaction is not more than one year after the date of incorporation of the limited liability partnership;
  2. that at the relevant time, the transferor is a partner in a partnership or holds the chargeable interest transferred as nominee or bare trustee for one or more of the partners in such a partnership;
  3. that at the relevant time, the partnership mentioned in condition 2 is comprised of all the persons who are (or are to be) members of the limited liability partnership (and no-one else); and
  4. that the proportions of the interests held by the partners are the same both before and after the transaction or, where they are different, the differences have not arisen as part of a scheme or arrangement the main purpose or one of the main purposes of which is the avoidance of liability to LBTT.

In conditions 2 and 3 above, the ‘relevant time’ means:

  • where the transferor acquired the chargeable interest after the limited liability partnership was incorporated, the time immediately after the chargeable interest was acquired; and
  • otherwise, immediately before the limited liability partnership was incorporated.

Claiming the relief

To claim this relief see the guidance on 'How to make a LBTT return and pay tax' which is available separately on our website.

Ref ID: 
LBTT3034
Archive Date: 
16 March 2015
Last updated: 
16 March 2015
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