Commentary

B7.516 Calculation of salaried, trust or charity partner's tax liability

Business tax
Business tax | Commentary

B7.516 Calculation of salaried, trust or charity partner's tax liability

Business tax | Commentary

B7.516 Calculation of salaried, trust or charity partner's tax liability

There are several other types of partner to which specific assessment rules apply — namely salaried partners, trust partners and charitable partners, as discussed below.

Salaried partner

Note, a salaried partner is not to be confused with the salaried members rules that apply to LLPs; see B7.514.

A salaried partner is usually an employee who has been given the title for prestige reasons and who is mainly remunerated by a share of the partnership's profits. He is unlikely to be a partner for tax purposes unless he is entitled to participate as principal in the running of the business and shares in responsibility for any losses incurred by the partnership1.

The question is one of fact depending on the true nature of the relationship in a particular case2.

Unless he is a true partner his earnings are subject to PAYE. It is inherent in the contract of partnership that a true partner has the right to participate in the general management and administration of the partnership3.

In exceptional cases where the earnings are largely in the form of commission and the individual bears his own expenses, he may be treated as carrying on a trade or profession, separate from the partnership, assessable as trading income. Where such a person is accepted as a partner for tax purposes, he is likely to be a non-active partner.

Trust partners

The share of the partnership's income and chargeable gains apportioned to the trust are charged to tax on the

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