Capital allowances for partnerships

Produced by a Tolley Owner-Managed Businesses expert
Owner-Managed Businesses
Guidance

Capital allowances for partnerships

Produced by a Tolley Owner-Managed Businesses expert
Owner-Managed Businesses
Guidance
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This guidance summarises the practical treatment of capital allowances where a qualifying activity is carried on by a UK partnership, including general partnerships and limited liability partnerships (LLPs). It focuses on plant and machinery allowances and the main procedural points a tax adviser will need when preparing partnership computations and advising on partner changes.

The general rules on which assets qualify for capital allowances (‘eligible assets’) are explained in the What are capital allowances? and What is plant and machinery? guidance notes.

Partnership property and ownership tests

A partnership can claim capital allowances on eligible assets which are either:

  1. owned by the partnership, or

  2. owned by an individual partner and used in a trade carried on by the partnership

Both of these are discussed below.

Owned by the partnership

It is not always clear whether an eligible asset is ‘owned’ by the partnership. Most partnerships are not legal entities (see the Partnerships ― overview guidance note), so some assets may be held on trust for the partnership by individual partners. Factors to consider include

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