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Tax when partnership assets are distributed in kind
12/11/2019

Partnerships are treated as transparent for Capital Gains Tax (CGT). This means that each partner is responsible for their share of any capital gains arising on the disposal of their interests in the assets of the partnership. Each partner is treated as owning a fractional interest in each of the assets of the partnership.

It is important to be aware of the rules where partnership assets are distributed in kind to one or more partners. This type of distribution can occur, for example, by a distribution when a partnership is dissolved. Any partners to whom the asset was not distributed will be treated as having disposed of their fractional interests in the asset at the time of the distribution. These partners will be taxed on their fractional interest of the gain based on market value.

The partner to whom the asset was distributed will not be treated as having made a disposal at the time of the distribution. In fact, his or her interest in the asset will have increased. Their CGT base cost on a future disposal of the asset will be determined by reference to its market value at the time of the distribution as reduced by the amount of the notional gain arising on their fractional interest at that time.


Maidstone Office


The Granary, Hermitage Court Hermitage Lane
Maidstone
ME16 9NT
 
 
 
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Tel: 0333 4141920

London Office


Studio 1
305a Goldhawk Road
London Office
W12 8EU
 
 

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Tel: 020 8746 3708

Ashford Office

 
Suite 13 Letraset Building
Wotton Lane  Ashford
Kent
TN23 6FL
 
 

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Tel: 0333 4141920

Membership

Nash Harvey Group LLP is a limited liability partnership registered in England
Reg No: OC376161 | VAT Number: 137 7621 01
Registered to carry on audit work in the UK by the Institute of Chartered Accountants in England and Wales.