Retirement of a partner

This guidance note explains the tax rules that apply when a partner leaves a partnership. For the position when a new partner joins the partnership, see the Admitting a new partner guidance note. A partner joining or leaving a firm can also have an effect on the capital allowances or capital gains position, see further the Capital allowances and the Capital gains of a partnership guidance notes.

For the rules which apply when the partners stay the same, but there is a change in the profit sharing ratios, see the Allocation of partnership income guidance note.

A partnership exists if two or more individuals are doing business in common, sharing profits and losses, see the Is there a partnership? guidance note. Even where the partnership deed states that a partnership comes to an end on the occurrence of a given event (such as the retirement of a partner), the partnership may in fact continue.