Individuals A,B and C are partners in an LLP. Companies X, Y and Z are also partners, A owns 100% of X, B owns Y, owns Z. historically the partnership profits have been allocated to the corporate partners. Following the new rules the profits will I think be assessed on A, B and C rather than their companies. If the business is transferred to a limited company owned equally by A,B and C will the capital gain associated with the goodwill on incorporation be assessed on A, B and C or on X, Y and Z (as thy have received the income historically) or is it a matter of discretion for the partners?
Replies (1)
Please login or register to join the discussion.
Depends
this is a very complex area and there are multiple planning opportunities to maximise the relief available to A,B,C as it may be beneficial to claim ER on the gain and then have this as a loan in the new company, enabling A,B,C to extract profits at a lower tax rate in the future. Where the gain ends up would depend on the partnership agreement, capital contributed etc etc.
You'd have to look through all the structure documents.