The following Owner-Managed Businesses guidance note Produced by Tolley provides comprehensive and up to date tax information covering:
This note details the capital gains tax rules for partners. For the tax on partnership profits, rather than gains, see the Trading profits of a partnership guidance note.
This note assumes a general knowledge of capital gains tax for individuals and companies. For detailed guidance on capital gains of individuals, see the Introduction to capital gains tax guidance note. For companies, see the Calculation of corporate capital gains guidance note.
See also Simon’s Taxes B7.406 onwards.
This note does not consider the tax position of foreign partners or of partnerships controlled abroad; see Simon’s Taxes B7.515 for this detail.
Once it is established that an asset is a partnership asset (see the Capital allowances - partnership changes guidance note), the partners are free to agree amongst themselves how the gains on the partnership asset are to be allocated.
There is no requirement that gains should be allocated in the same proportion as profits, or that the allocation should reflect the contributions made by the partners.
The ratio in which gains are allocated should be set out in the partnership agreement or in other documentation, such as minutes of partnership meetings. Failing that, the partnership accounts can be used to demonstrate the ratios. If there is no written agreement or other evidence, the default position is that the assets should be treated as held by the partners in equal proportions.
Each partner is treated as owning a fractional interest in the partnership assets. The value of a partner’s share in a partnership asset is his percentage share of the total asset. There is no discount or premium to reflect a majority or minority holding, but rather a simple division. See Example 1.
As all partnerships are transparent (see the Partnerships ― overview guidance note), any acquisition or disposal of a partnership asset is treated as made by the partners and not by the partnership.
Therefore, any capital gains tax due on disposal of a partnership asset is
**Free trials are only available to individuals based in the UK. We may terminate this trial at any time or decide not to give a trial, for any reason.
Access this article and thousands of others like it free for 7 days with a trial of TolleyGuidance.
Read full article
Already a subscriber? Login
IntroductionUK tax must be withheld on UK payments including:•interest•royalties•rental incomeWithholding tax may be reduced under double tax treaties (DTT) or European directives, both of which may be subject to making a formal claim.This guidance note outlines the rules for UK withholding tax, and
This note offers guidance in respect of the administration of company tax returns. If a company or organisation is subject to corporation tax they will have to complete and file a company tax return for each accounting period. A company or organisation must, in the main, file a return even if they
What is structures and buildings allowance (SBA)?From 29 October 2018, expenditure on constructing a non-residential building or structure, or in certain cases, expenditure on acquiring such a building or structure, qualifies for an SBA. The following note has been updated for the changes announced
This guidance note provides an overview of what conditions need to be met before a business is entitled to treat VAT incurred as input tax. This note should be read in conjunction with the other notes in the ‘Claiming input tax’ subtopic. For a flowchart outlining the procedure for claiming input
To view our latest tax guidance content, sign in to Tolley Guidance or register for a free trial.