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HMRC internal manual

Capital Gains Manual

Roll-over relief: dissolution of partnership: partition of land


Where partners exchange interests in land which is a single asset, see CG71803+, and which they own jointly, statutory roll-over relief cannot be claimed for the gain on disposal against the cost of the interest in the area of land retained. This is because there has not been the acquisition of or of an interest in `other assets’. By concession, the area of land in which the interest is acquired should be treated as a `new asset’ provided that:

  • the purpose of the exchange is to enable the partnership to be dissolved,


  • dissolution occurs immediately after the exchange,


  • the ex-partners only retain an interest in land used by them in a new trading enterprise and do not retain any interest in that part of the land no longer used by them for trade purposes.

There is no requirement for each partner to become sole owner of part of the land following the exchange. This feature distinguishes this Concession from ESC/D26 (in relation to disposals prior to 6th April 2010, see CG73015+) and the provisions of TCGA 1992/S248A - 248E (in relation to disposals on or after 6th April 2010, see CG73000+).For example, A, B and C jointly and equally owned land which they have farmed in partnership since its acquisition by them. A wishes to leave the partnership and to farm one-third of the land alone. B and C wish to remain in partnership farming the remaining two-thirds of the land. A’s interest in two-thirds of the land is exchanged for B and C’s interest in one-third of the land. Immediately afterwards, the partnership is dissolved and A commences farming on that part of the land now owned by A while B and C commence a new partnership farming the remaining two-thirds of the land now owned jointly by them. Depending on the valuations of the interests exchanged, relief is available to each of A, B and C.

If in the example, B and C had ceased to farm and had let out the area of land which they jointly retained, only A would be entitled to claim relief under ESC/D23.