Syllabus A2. Chargeable gains A2b. The scope of CGT

A2bvii. Partnership Disposals

Syllabus A2bvii)

Identify the occasions when a capital gain would arise on a partner in a partnership on the disposal of a partnership asset

Partnership CGT

Disposal of a partnership asset to a third party

Each partner is deemed to own a fractional share of the partnership assets. 

This is based on the agreed capital profit sharing ratio in the partnership agreement.

  • On disposal of a partnership asset to a third party, a capital gain should be calculated normally, then this gain is distributed to each partner based on the profit sharing ratio. 

    Each partner should include their share of the gain in their own capital gains computation.


In January 2010, Paul and Phil commenced a partnership. 

They introduced capital into the business of £30,000 and £20,000 respectively and agreed to share profits 60%:40%. 

The partnership purchased a freehold premises for £125,000 in January 2010. 

In September 2018 the partnership sold the premises for £495,000 and continued to trade in a rented premises. 

What are the chargeable gains arising on Paul and Phil in 2018/19 in respect of the partnership disposal?

  • Solution

    Sale proceeds £495,000
    Cost (£125,000)
    Capital gain £370,000

    Paul Capital Gain:  £370,000 * 60% = £222,000

    Phil Capital Gain:  £370,000 * 40% = £148,000