PM138000 - How partners are taxed

Although the partnership has no tax liability, a partnership return (SA800) is required in order to determine the partnership profits on which the partners will be taxed. The partnership return allows all matters relating to the calculation of profits or losses and their allocation between partners to be dealt with centrally. Detailed guidance on how the Self Assessment regime applies to partnerships can be found at PM20000 onwards. Separate tax computations will be required where the partnership has mixed membership, such as individual and company members or UK resident and non-UK resident members. The implications of this are covered in detail at PM210000 onwards.

Each partner is required to include on their own tax return the share of partnership income, loss, tax, credit or charge allocated to them in the partnership statement for the relevant period. The share of partnership profits or loss shown on the partnership return is conclusive for tax purposes as to whether or not a partner has a share in the partnership profits or losses for any period and what any persons share is. The share of profits or loss that a partner enters in their own return must correspond with the profit or loss allocated to them in the partnership return.

For returns relating to the tax year 2018-19 and onwards where there is disagreement between the partners over the allocation of profits or losses, partners can dispute the figure of profit or loss allocated to them by referring the dispute to the tribunal. They should still include the share allocated to them in the partnership statement for the relevant period on their own return.

A partner may refer the dispute to the Tribunal Service (https://www.gov.uk/government/organisations/hm-courts-and-tribunals-service) for the tribunal to resolve the dispute. The partner must also advise the nominated partner and HMRC that they have referred the dispute to the tribunal. Further details of this process are provided at PM150000.

There is further guidance on this at EM7025.