Corporation Tax Act 2010 section 961

Non-trading profits and losses

Section 961 extends the partnership relief transfer rules so that they apply to non-trading activities carried on in partnership, not just to trades.

• Where a company is a partner in a firm and the firm earns profits subject to corporation tax under miscellaneous charges (as listed in section 1173), the partnership relief transfer rules in sections 958 to 960 are extended to cover those non-trading profits and losses.
• The company's share of the firm's non-trading profits or losses is treated as though the firm had made them while carrying on a trade, so that the relief transfer mechanism works in the same way.
• Any capital allowance relating to a special leasing arrangement for plant or machinery (under sections 259 or 260 of the Capital Allowances Act 2001) is treated as if it were an allowance used in calculating the profits of that notional trade — it cannot be set against the partner company's other profits.
• The overall effect is to ensure that the restrictions on transferring relief between partners (set out in sections 958 to 960) apply equally to non-trading partnership income, preventing relief from being used more broadly than intended.