The following Owner-Managed Businesses guidance note Produced by Tolley provides comprehensive and up to date tax information covering:
All UK partnerships are treated as transparent for tax purposes ― including LLPs and Scottish partnerships, despite the fact that they have a legal personality. This means that one ‘looks through’ the partnership to tax the partnership income in the hands of the partners themselves.
Even though the partnership is transparent, the first step in working out the partners’ tax position is to calculate the profits from a trade or profession as if the partnership were a UK resident individual, using the normal rules, see the Trading profits of a partnership guidance note.
The treatment of payments to partners, such as rent and removal expenses, has special treatment; so too do payments of interest on partnership capital. See the Trading profits of a partnership guidance note.
Once the overall tax-adjusted trading profit or loss is established, it is divided up between the partners in their agreed profit-sharing ratios, see the Allocation of partnership income guidance note.
Each individual’s share is taxed or relieved as if it derived from a trade or profession carried on by him alone. There is thus a ‘notional trade’ carried on by each partner separately.
For mixed partnerships (ie partnerships made up of a mixture of both individual and non-individual members), where a corporate partner receives an excessive profit share or an individual receives an excessive share of losses, anti-avoidance legislation requires that the amounts are reallocated. See the Partnership anti-avoidance provisions guidance note.
In some jurisdictions, partnerships are taxed in the same way as in the UK (transparent); in others, they are treated more lik
**Free trials are only available to individuals based in the UK. We may terminate this trial at any time or decide not to give a trial, for any reason.
Access this article and thousands of others like it free for 7 days with a trial of TolleyGuidance.
Read full article
Already a subscriber? Login
This guidance note explains the general rules surrounding the availability of indexation allowance on the disposal of company assets and provides information on the rebasing rules for assets held on 31 March 1982. For an overview of the general position regarding company disposals, please refer to
The married couple’s allowance (MCA) is only available if one of the two spouses or civil partners was born before 6 April 1935. This means that one member of the couple must be at least 87 years old on 5 April 2022 to qualify for an allowance in the 2021/22 tax year.There is a distinction in the
IntroductionA pension scheme that is not a registered scheme is known as an EFRBS. Since April 6 2006, the distinction between what were approved and unapproved pension schemes has been replaced with a distinction between registered and unregistered schemes.The position as it applies with effect
Plant and machinery allowancesThree types of allowance are available for expenditure on plant and machinery:•the annual investment allowance (AIA), which currently provides a 100% allowance for the first £1,000,000 of expenditure per year, see the Annual investment allowance (AIA) guidance
To view our latest tax guidance content, sign in to Tolley Guidance or register for a free trial.