LBTT2010 - Partition Relief

LBTT guidance on the partition or division of a chargeable interest when determining the chargeable consideration in a land transaction.

Where a land transaction involves dividing or partitioning a chargeable interest to which parties are jointly entitled (whether a single chargeable interest or more than one chargeable interest), this is not treated as an exchange. The giving up of a share in one part of the land is not treated as chargeable consideration for the acquisition of a share in another part.

“Jointly entitled” means entitled as joint owners or common owners.

Summary

Where parties jointly own land and divide that land between themselves:

  • Paragraph 6 may apply to one or more chargeable interests.
  • The provision removes both chargeable consideration and the market value override.
  • Where the interests taken are of equivalent value, no LBTT arises.
  • Where a balancing payment is made, LBTT applies only to that payment.

LBTT(S)A 2013 schedule 2 paragraph 6


Example 1 – Partition of a single jointly‑owned property

Blue and Purple each own equal shares of a field. They agree to divide the field so that each takes a 50% share and each becomes the sole owner of their respective portion.

If each half of the land is of equal value, then no LBTT is chargeable.

Example 2 – Partition of multiple properties

Orange and Red jointly own fields X and Y in equal shares. They agree that Orange will take complete ownership of X and Red will take complete ownership of Y. The values of the half‑shares in X and Y are equal therefore no LBTT is chargeable.

If the values of the interests received are unequal, LBTT is chargeable only on any balancing payment, calculated under normal rules.

 

 

Page Revisions

  • 7 July 2017, 12:24