Partnerships ― inheritance tax

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Owner-Managed Businesses

Guidance

This note explains the general rules surrounding the inheritance tax (IHT) implications of being a partner in an English general partnership. Different rules may apply to Scottish partnerships, see Simon's Taxes I6.201.

As a partnership is transparent for tax purposes, the inheritance tax rules are applied to each partner in accordance with their individual circumstances and their interest in the partnership and its assets.

Transfer of partnership interest to a connected person

The definition of a connected person is in TCGA 1992, s 286 as applied by IHTA 1984, s 270.

The transfer of an individual’s share in a partnership to a connected person is not treated as a transfer of value for IHT purposes, provided there is no gratuitous benefit passed and the

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