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Section 1 of SP D12 explains that the market value of a partner’s fractional interest in a partnership asset will be a fraction of the value of the entirety of the partnership’s interest in the asset without any discount for the size of the partner’s interest.

A valuation of a partner’s fractional interest in an asset can be obtained from:

• the Valuation Office Agency â€� for land or buildings in the UK, or
• Shares and Assets Valuation â€� for unquoted shares or securities, partnership goodwill, see CG68300, or other intangible assets.

When obtaining a valuation of a partner’s fractional interest in an asset you must make it clear that the special partnership valuation basis is required and that the normal rules for discounting do not apply.

Example

A partnership between Y and Z owns 70% of the issued share capital of X Ltd.

The partners� interests in partnership assets are:

• Y = 80%
• Z = 20%

The market value of the 70% shareholding as at 31 December accounting for the premium value attributable to the partnership’s controlling interest in X Ltd was £10,000.

The market values of the partners� interests in the 70% shareholding in X Ltd as at 31 December were:

• Y - £10,000 x 80% = £8,000
• Z - £10,000 x 20% = £2,000

Note that the market value is apportioned by reference to the partners� fractional interests. No premium value is attributed to Y’s larger partnership interest, nor is any reduction in value attributed to Z’s minority partnership interest.