New partners’ losses

By Tolley

The following Owner-Managed Businesses guidance note by Tolley provides comprehensive and up to date tax information covering:

  • New partners’ losses
  • New partners and commencement of partnership
  • Opening year losses
  • Potential restrictions on availability of losses
  • Overlap losses

New partners and commencement of partnership

If the partnership makes a loss and consequently a loss is allocated to a new partner, then special rules apply if the partner is not a corporate partner.

The new partner will be treated as a sole trader who commences his business and makes a loss in his early years. The rules which follow apply to new partners joining an existing partnership and the commencement of a new partnership in the same way as they apply to sole traders.

For corporate partners the position is much simpler. The loss allocated to it is included in the company self-assessment tax return. Where the period for which the partnership makes up accounts does not coincide with the company’s accounting period, the amounts are apportioned to the company’s accounting periods on a time basis

See also Simon’s Taxes B7.520 (subscription sensitive).

Opening year losses

Losses incurred in the course of carrying on a tr

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