CG62093 - Reliefs: Replacement of Business Assets (Roll-over Relief): Computation of Relief: Partnerships

The effect of TCGA92/S59(1) is to treat transactions in partnership assets as having been made by the partners rather than by the partnership. Therefore a claim for roll-over relief under TCGA92/S152 cannot be made by a partnership. However, claims can be made by a partner in a partnership but only to the extent of his interest in the old and the new assets and only to the extent that those assets are used for the purposes of a trade carried on by him (either alone or in partnership).

Each partner’s share of the disposal consideration of the old assets and costs of acquisition of the new assets must be established in order to determine the amount of relief due.

Guidance on the computation and method of charging gains which accrue on disposals of partnership assets is at CG27000.

As an example, when Bea and Winnie formed their partnership, they acquired premises for £100,000 and agreed that this asset would be held in equal shares. The premises were then sold for £340,000. A few months later, new trading premises were acquired for £400,000 but this time it was agreed that Bea would hold a 60% interest and Winnie would have 40%.

The computation of roll-over relief available is as follows:

-	-	-	Bea	-	Winnie
-	-	-	£	-	£
-	Disposal proceeds	-	170,000	-	170,000
Less	Cost	-	50,000	-	50,000
-	CHARGEABLE GAIN	-	120,000	-	120,000
-	Cost of new asset	-	240,000	-	160,000
-	Proceeds re-invested	170,000	-	160,000	-
-	Amounts not re-invested	0	-	10,000	-
-	(i.e. chargeable gain)	-	-	-	-
-	Amounts of chargeable gain	-	-	-	-
-	deducted	-	120,000	-	110,000
-	Adjusted cost of new asset	-	120,000	-	50,000