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HMRC internal manual

Business Income Manual

Business Income Manual: Computing the amount to assess: Mixed Membership Partnerships: Excess profit allocation: Relevant tax amount

ITTOIA/S850C(2)(b), (3)(c)(ii) and (9)

The excess profit allocation rules only apply where it is reasonable to suppose that the “relevant tax amount” is lower than it would have been had the profit shares not been diverted from the individual member to a non-individual member.

The relevant tax amount is the tax that would have been payable by:

  • the individual on the profit share that they were allocated; and
  • the non-individual partner on the profit share, as originally allocated.


The relevant tax amount does not include any potential tax on the potential payment or distribution from the non-individual partner to the individual.