EM7500 - Partnerships: general

A partnership is defined in s1(1) Partnership Act 1890 as ‘the relation which subsists between persons carrying on a business in common with a view to profit’, see PM120100.

Partnerships are responsible for returning information relating to the partnership business. This information includes the profits (or losses) for any period of account, the capital allowances claimed for that period and details of the profit (or losses) to be allocated to each partner for that period; this should follow the profit allocation in force for that period.

But for the purposes of assessment and payment of tax, partnerships are not treated as a legal entity separate and distinct from the individual persons making up the partnership and the Income Tax rules operate on the partners as if the partnership did not exist.

There are no partnership assessments under SA. Instead, each partner is allocated a share of the partnership profits (or losses). Those profits (or losses) are treated as if they had arisen to the partner as an individual in business. The partnership is not responsible for paying the tax on the partnership profits. Each partner is solely responsible for the tax due on their share of profit (or how the is to be utilised)

Individual partners are therefore required to include their share of any partnership profits (or losses) in their own personal returns.

The Partnership Manual provides guidance on topics such as how partnerships are taxed in the UK, how the Self Assessment Regime applies to partnerships and how partnership profits should be determined.