Terminal loss relief for partners

Where a partner either retires from partnership or there is a permanent cessation of a partnership’s business, special ‘terminal’ loss relief rules apply. The rules are the same as those which apply to sole traders where the partner is an individual, see the Sole trader losses on cessation guidance note and also the same as those which apply to companies where the partner is a company, see the Terminal trading loss relief guidance note.

The rules for individual partners and corporate partners are similar in operation in that loss relief can be claimed for the year of the loss and the preceding three years.

For corporate partners, the terminal loss relief provisions will only apply if the trade carried on in partnership was a separate trade in its own right. If it was not, the loss