The following Owner-Managed Businesses guidance note by Tolley provides comprehensive and up to date tax information covering:
Partnership trading losses are computed in the same way as profits. Once the partnership loss has been computed, it is allocated between the partners in accordance with the profit sharing ratios for that accounting period.
If the partnership makes aloss, once the loss has been allocated, each partner is then able to claim loss relief based on their own personal circumstances. There is no concept of a‘partnership loss’. The loss belongs to the partners and loss relief claims are made individually.
For partnerships continuing in business, and partners continuing in partnership year after year, losses are relieved in accordance with the relevant income or corporation tax loss relief rules (depending on whether the partner is acorporate partner or not).
Broadly, losses allocated to the relevant partners may be relieved against the following:
ITA 2007, ss 64, 71, 83; CTA 2010, s 37
These are dealt with in more detail below.
For individual partners (as opposed to corporate partners), there are further complications. In particular, it is important to remember the cap on unlimited income tax reliefs; see the Trading losses ― cap on unlimited income tax reliefs. This cap restricts relief for trading losses (and property losses), where these are used against general income and the taxpayer claims more than £50,000 in reliefs in any one year.
Also, special rules apply for
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