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HMRC internal manual

Capital Gains Manual

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HM Revenue & Customs
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Taper relief: disposals before 6 April 2008: SP D12

Taper relief was available where chargeable gains arose on disposals by non-corporate partners of interests in partnership assets on or after 6 April 1998, TCGA92/S2A and TCGA92/SchA1. It was not available in the computation of gains accruing to corporate partners within the charge to Corporation Tax.

Taper relief ceased to be available for disposals by non-corporate partners made on or after 6 April 2008.

Guidance on taper relief for disposals on or after 6 April 1998 and before 6 April 2008 is given at CG17895 onwards.

Holding period for taper relief

Where a partner acquired his entire interest in a partnership asset in one transaction his holding period started on the date of that acquisition or, if later, 6 April 1998.

Where a partner acquired his interest in a partnership asset in a series of transactions his holding period for additional fractional interests is calculated from the date on which he acquired his original fractional interest, or, if later, 6 April 1998.

Fungible assets

Partners may own fractional interests in fungible assets, such as shares of the same class in the same company that are not separately identified.

Guidance on the identification rules that apply for fungible assets are given at CG51500. The identification rules that apply for disposals during the period 6 April 1998 up to and including 5 April 2008 are no longer included in this manual. Guidance on the identification rules for disposals on or after 6 April 2008 is given at CG51550+.

Goodwill - Paragraph 12 SP D12

Paragraph 12 of SP D12 applies on a disposal of an interest in partnership goodwill for actual consideration where:

  • the value of goodwill generated in the business is not recognised in its balance sheet and
  • as a matter of consistent practice no value is placed on that goodwill in dealings between the partners.

It provides that for taper relief purposes disposing partners will be treated as having held their fractional interests in partnership goodwill from the date on which they first became entitled to an interest up to the date of the disposal for actual consideration irrespective of any changes in partnership sharing ratios during that period.

Paragraph 12 of SP D12 also applies to goodwill which was acquired by a partnership for consideration but which is not, at any time, recognised in its balance sheet at a value exceeding its cost nor otherwise taken into account in dealings between the partners. For the purpose of computing taper relief such purchased goodwill is treated as an asset that is separate from the partnership’s self-generated goodwill.

It provides that on a disposal for actual consideration of an interest in such purchased goodwill the disposing partners will be treated for taper relief purposes as having acquired their interests either on the date of its acquisition by the partnership or on the date on which they first became entitled to an interest in that goodwill, whichever is the later.