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HMRC internal manual

Capital Gains Manual

From
HM Revenue & Customs
Updated
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Calculating a fractional interest in a partnership asset

CG27150 explains that partners are treated as owning fractional interests in each of the assets of the partnership and that a disposal occurs when a partner’s fractional interest in an asset is reduced. This may occur on the disposal of an asset by the partnership or on a change in the partners’ sharing ratios.

A partner’s fractional interest in a partnership asset should be determined by reference to:

  • any specific agreement which sets out how capital assets are to be allocated or if there is no such agreement,
  • any agreement or other evidence which sets out how capital profits are to be shared or if there is no such agreement or evidence,
  • any agreement or other evidence which sets out how income profits are to be shared or if there is no such agreement or evidence,
  • Section 24 (1) Partnership Act 1890, which provides that assets should be treated as held by the partners in equal proportions, see BIM72505.