This Practice Note is about the capital gains tax and corporation tax on chargeable gains treatment of UK general partnerships, limited liability partnerships (LLPs) and limited partnerships.

In this note the term 'partner' should be read as including a member of an LLP, and 'CGT' is used as a shorthand for both capital gains tax and corporation tax on chargeable gains.

Partnerships are tax transparent, meaning that they are not taxable in their own right. Instead, partnership profits and gains are directly taxable on the partners. For CGT purposes, capital assets of the partnership are treated as owned by the partners in fractional shares. The partners' interests in the partnership itself are not treated as separate capital assets. Partnership ‘dealings’ are treated as ‘dealings’ by the partners and not by the partnership as such.

In the case of an LLP, there are some circumstances in which tax transparency may not apply or may be lost. An LLP that is not tax transparent will be taxed in the same way as a company and the CGT treatment described