Another partnership tax question
Partnership profits say £100,000 - capital profit £40,000 and income profit £60,000.
Can profits be shared - capital profits to partner A and income profits to patner B - answer YES
and would this sharing follow though to the tax so that A paid CGT on the capital gains and B paid IT on the income profits?
or would A have to have 40% of the gains and 40% of the income with B having the other 60% of both of them for tax purposes?
Yes
It is up to partners how they share their income and capital. It is unwise to vary year on year unless this is backed up by changes to any partnership agreement or deed. HMRC may find grounds to challenge and of course it is fraud to change any document after the event, so I would ensure that you have the agreement to change put in writing at the beginning of the year.
Bear in mind that that ownership of any land and property will be based on beneficial ownership, so obviously it depends on how you have structured the arrangement.
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