Capital Gains Tax & Partnerships
HMRC have published a new business brief in relation to the interaction between Capital Gains Tax and Partnerships. This refers specifically to the new rebasing rules introduced in Finance Act 2008 on assets held by a partnership at 31 March 1982.
These new rules will impact those who dispose of partnership assets or whose share of the partnership (capital, not income) is varied after 5 April 2008. The changes are intended to simplify the rebasing rules for disposals on or after 6 April 2008. From this date, gains or losses arising on disposals are calculated as if the assets disposed of had been acquired at their market value on 31 March 1982. This removes the need for the ‘kink’ test and for rebasing elections.
The new rules will apply where a person (‘P’) disposes of an asset on or after 6 April 2008 and:
• P acquired the asset after 31 March 1982 and before 6 April 2008 under a statutory no gain/no loss provisionand
• any previous disposal and acquisition of the asset after 31 March 1982 was one to which a statutory no gain/no loss provision appliedand
• rebasing under section 35 (2) TCGA 1992 did not apply to the relevant disposal, that is, the disposal of the asset to P