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HMRC internal manual

Corporate Finance Manual

Loan relationships: partnerships: allocating credits and debits to the company partner

Apportioning the gross credits and debits

Having arrived at the gross credits and debits, these are then allocated to each company partner, under S381, as if the gross credits and debits were apportioned, under CTA09/PT17, according to the partners’ shares.

The computations will vary with the nature of the company partner, for example a

  • financial trader, or
  • connected person

may have different credits and debits.

Particular problems in the computation can occur when the partnership and the company partner account in different currencies. This was dealt with in a Tax Bulletin article in October 2002 (TB62/02). The article is reproduced at CFM36100.


ABC partnership lends £100,000 to D Ltd.

The members of ABC partnership, and their profit shares, are

  • Mrs A 20%
  • B Ltd 60%
  • C Ltd 20%

The loan carries interest at 10% per annum.

Each company will have gross credits of £10,000, the interest accruing on the loan. This is then shared between the company partners, so that

  • B Ltd brings in a credit of £6,000
  • C Ltd brings in a credit of £2,000.

Mrs A is chargeable to income tax and will compute her profits under the income tax rules.