The following Owner-Managed Businesses guidance note Produced by Tolley in association with Jackie Barker of Wells Associates provides comprehensive and up to date tax information covering:
This note explains the general rules that apply on the transfer of a general partnership to an LLP. Both commercial and taxation aspects need to be considered. For guidance on the incorporation of an LLP, see the How to set up an LLP guidance note.
Where the transfer of a general partnership to an LLP is undertaken and both the trade and at least one of the partners / members before and after the transfer are the same, it is generally neutral for tax purposes.
The trade of the general partnership is not treated as ceasing and there is no commencement of a new trade within the LLP. Therefore, there is no impact on the members’ notional trade and they continue as if nothing has happened.
Similarly, no balancing charges or allowances arise in respect of the capital allowance provisions and the LLP takes over the assets at their tax written down value.
Where a partner has claimed relief for interest paid on a loan to
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Legislative definition of plant and machineryThe general rule allowing capital allowances on plant and machinery is given at CAA 2001, s 11. There is no statutory definition of the term ‘plant and machinery’ but there is confirmation in the legislation on what constitutes a building or a structure
Class 2 and Class 4 national insurance contributions (NIC) are paid by self-employed individuals and partners in a partnership on their profits arising within the UK. This guidance note considers Class 4 contributions. For Class 2 contributions, see the Class 2 national insurance contributions
Why defer a gain?An individual’s net taxable income and chargeable gains for the tax year influence the rate of tax payable on their capital gains. See the Introduction to capital gains tax guidance note.Depending on the nature of the asset disposed of, this can result in the individual paying
If the self assessment tax return shows that a repayment is due, the taxpayer can claim a repayment or leave it as a credit on their statement of account.The quickest and safest method is for HMRC to make the payment direct to the taxpayer’s bank or building society account and so they are asked to