LLP Capital Gains Tax: Rates, Reliefs, and Deadlines

An LLP does not pay capital gains tax itself. Under Section 59A of the Taxation of Chargeable Gains Act 1992, HMRC treats a trading LLP as tax transparent and looks through it to the individual members, each of whom is taxed on their share of any chargeable gain.¹²³ Each member reports the gain through their own Self Assessment return.

Why the LLP Pays Nothing

Section 59A(1) applies whenever an LLP carries on a trade or business with a view to profit. Once that condition is met, dealings by the LLP are treated as dealings by its members acting in partnership, and any gain is assessed on each member separately.¹ The LLP is a body corporate under company law, but for CGT it effectively does not exist as a taxable entity.

The practical consequence is that every member is regarded as owning a fractional interest in each asset the LLP holds, not merely a stake in the partnership as a whole.⁴ Gains are computed asset by asset and allocated member by member.

Working Out Your Share of an Asset

Your fractional interest is set by a fixed hierarchy in HMRC’s guidance. HMRC works down the list and stops at the first level that produces an answer:⁵

Any written asset-sharing agreement covering how the LLP’s capital assets are allocated between members.
Failing that, any agreement or evidence showing how capital profits are divided.
Failing that, the agreement covering income profits.
Failing all of the above, equal shares under the Partnership Act 1890.

Many LLP agreements set income profit shares but say nothing about capital. In that situation your income profit share drives your CGT liability on disposals, even where members might have expected capital to be split differently.

Rates and Allowance for 2026-27

The main CGT rates for individuals from 6 April 2025 are 18% on gains within the unused basic rate band and 24% above it, and those rates carry into 2026-27.² The old 10% and 20% standard rates, with higher rates reserved for residential property, were replaced following the Autumn Budget 2024 changes.

The annual exempt amount for 2026-27 is £3,000, down from £12,300 a few years earlier, so smaller gains now trigger a bill than members are used to.³

When the LLP Sells an Asset

On a sale to a third party, the total gain is computed at partnership level as proceeds minus original cost, then split between members using the fractional interest hierarchy.⁶ Incidental costs of acquisition and disposal, such as legal fees, valuation costs, and stamp duty land tax, are split in the same proportions. Each member subtracts their share of costs from their share of proceeds to arrive at an individual chargeable gain.

The calculation is straightforward while profit-sharing ratios stay constant over the life of the asset. Once ratios have shifted, the calculation is more involved, because each shift is itself a disposal event.

Changes in Partnership Shares Can Trigger a Tax Charge

Whenever profit-sharing ratios change, whether because a new member joins, an existing member retires, or the partners simply agree to reallocate, a disposal event occurs. A member whose fractional interest decreases is treated as having disposed of part of every partnership asset; a member whose interest increases is treated as acquiring that corresponding part.⁷ A partner can face a CGT charge without receiving any cash. If your interest drops from 50% to 25%, you have disposed of half your stake in every asset the LLP owns.

Under Statement of Practice D12, where no payment passes outside the partnership accounts, the disposal is valued at the member’s fractional share of the current balance sheet value of each chargeable asset, and often produces no gain or loss.⁸ Where actual consideration changes hands outside the accounts, or where connected persons are involved and the deal is not at arm’s length, market value applies instead, and real tax charges can arise.⁷

Business Asset Disposal Relief

A member who disposes of the whole or part of the business may qualify for Business Asset Disposal Relief. The relief rate was 14% for 2025-26 and rises to 18% for disposals on or after 6 April 2026.² Eighteen per cent matches the lower main rate, but still helps higher-rate taxpayers who would otherwise pay 24%.

To qualify, you must have been a partner in the LLP and owned the business for at least two years up to the disposal date.⁹ If you are closing rather than selling, the assets must be disposed of within three years of cessation. The lifetime limit on qualifying gains is £1 million, cumulative across every claim you have ever made. If you are selling personal assets that you lent to the LLP, you must also be disposing of at least 5% of your partnership interest, and the assets must have been used by the LLP for at least a year before the sale or closure.

Losses

Losses flow through in the same way as gains. Each member takes their share of a partnership loss according to their fractional interest, and can set it against other chargeable gains in the same tax year. Any excess, after deducting the £3,000 annual exempt amount, carries forward indefinitely.¹⁰

Losses cannot be carried back for CGT purposes, and cannot be set against income. Keep records even in years with no gains, because there is no time limit on carrying losses forward.

Reporting and Deadlines

Gains are reported at two levels. The LLP files a Partnership Tax Return (SA800) showing the total gains and how they are allocated between members.¹¹ Each member then reports their allocated share on the Capital Gains Summary pages (SA108) with their personal Self Assessment return, entering the gain after allowable losses and the annual exempt amount.¹²

Keep records covering the full lifecycle of each asset: acquisition date and cost, your fractional interest at acquisition and disposal, sale proceeds, and all incidental costs. Receipts for capital improvements and professional fees matter because they increase your base cost. If ratios changed during ownership, keep records of each change so the base cost can be traced through each deemed disposal.

60-Day Reporting for UK Residential Property

When the LLP disposes of UK residential property, each member must report their share of the gain and pay CGT on account within 60 days of completion.¹³ The clock runs from the completion date, not the end of the tax year. The gain still goes on the annual Self Assessment return, but the tax cannot wait until January.

Self Assessment Deadlines and Penalties

For gains reported through Self Assessment, the online filing deadline is 31 January after the end of the tax year. A gain arising in 2026-27 must be filed and paid by 31 January 2028.¹⁴ Paper returns are due earlier, on 31 October.

Missing the filing deadline attracts an initial £100 penalty, then daily penalties of £10 a day after three months for up to 90 days (£900), then a further 5% of the tax due or £300 (whichever is greater) at six months, and the same again at twelve months. Interest also runs on any unpaid tax from the payment deadline.¹⁵

When Tax Transparency Ends

Section 59A only applies while the LLP is carrying on a trade or business with a view to profit. If it permanently ceases to do so, the LLP reverts to being treated as a body corporate for CGT, and gains on later disposals are charged on the LLP itself, computed as if the LLP had never been transparent throughout its ownership.⁴¹

Transparency survives a temporary cessation, and continues through a reasonable winding-up period after permanent cessation, provided the winding up is not connected with tax avoidance and is not unreasonably prolonged. It ends immediately on the appointment of a liquidator or the making of a winding-up order. Neither the start nor the end of transparency is itself a deemed disposal, so there is no automatic tax charge on the transition.¹

1
Legislation.gov.uk. Taxation of Chargeable Gains Act 1992 – Limited Liability Partnerships
2
HM Revenue & Customs. Capital Gains Tax Rates and Allowances
3
GOV.UK. Capital Gains Tax – Allowances
4
GOV.UK. Capital Gains Manual – CG27050
5
HM Revenue & Customs. Capital Gains Manual – CG27220
6
GOV.UK. HS288 Partnerships and Capital Gains Tax (2022 to 2023)
7
HM Revenue & Customs. Statement of Practice D12 – Partnerships
8
HM Revenue & Customs. Capital Gains Manual – CG27170
9
GOV.UK. Business Asset Disposal Relief – Eligibility
10
GOV.UK. Capital Gains Tax – Losses
11
HM Revenue & Customs. Self Assessment – Partnership Tax Return (SA800)
12
GOV.UK. Self Assessment – Capital Gains Summary (SA108)
13
GOV.UK. Report and Pay Your Capital Gains Tax – Property
14
GOV.UK. Self Assessment Tax Returns – Deadlines
15
GOV.UK. Self Assessment Tax Returns – Penalties