Commentary

B7.515 Calculation of non-resident partner's tax liability

Business tax
Business tax | Commentary

B7.515 Calculation of non-resident partner's tax liability

Business tax | Commentary

B7.515 Calculation of non-resident partner's tax liability

The general partnership charging rules are applied to a non-UK resident member of a partnership in such a way as to ensure that the partner is taxed only on their share of profits earned in the UK1 (whereas UK resident partners are taxed on their share of worldwide profits).

Non-resident corporate partners

For corporate tax purposes (ie where there is a non-resident corporate partner), a separate computation of the partnership profits has to be made on the basis that the partnership is itself a non-resident company, ie on the basis that it was carrying on business in the UK through a permanent establishment. The profit or loss of a non-resident corporate member is its share of the profit so computed2. This restricts the non-resident company's liability to UK corporation tax to its share of the partnership's UK-source profit3.

Special rules apply in the case of non-UK resident companies that are members of a partnership whose sole activity involves undertaking a UK property investment business. In such cases, the non-UK resident company is generally liable to income tax as a non-resident landlord where the property income arises before 6 April 2020 (see B6.217) and chargeable to corporation tax4 where the property income arises on or after 6 April 2020 (see D4.122B).

Non-resident individual partners

For income tax purposes, where a tax year is a split year for a partner, the individual is treated as non-UK resident for the overseas part of the year5. For details of

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