HMRC internal manual

Inheritance Tax Manual

Valuing the partnership interest: Income Tax

A deceased partner’s Income Tax liability is a personal liability, not a business liability.


the capital account may be shown as follows:-

Capital account as at 31.3.12 =£106,510

Add share profit + £78,750

Less income tax - £15,670

Less drawings - £58,000

Balance at 31.3.12 = £111,590

You should check first that the Income Tax liability represents tax unpaid at the death. If so, add it back to make the capital account £127,260. You can then accept the Income Tax liability as an additional liability of the estate unless it is already shownas a liability at box 82 of form IHT400.