PARTNERSHIP

Limited Company

Partnership

Sole Traders

Contractors

Self Employment

Limited Liability Partnership

Landlords

Freelancers

Charities

A partnership is a type of business structure where two or more individuals share ownership, responsibilities, and profits. Unlike a limited company, a partnership is not a separate legal entity. This means the partners are personally responsible for the business’s debts and obligations.

Each partner contributes to the business whether through capital, skills, or labour and in return, they share in the profits (or losses) according to the terms set out in a partnership agreement. This agreement isn’t legally required, but it’s highly recommended to outline how the business will be run and how profits, duties, and liabilities will be divided.

There are two main types of partnerships in the UK:

Ordinary Partnership – All partners are equally responsible for managing the business and personally liable for any debts.

Limited Partnership or LLP (Limited Liability Partnership) – In an LLP, each partner’s liability is limited to the amount they invest. LLPs must be registered with Companies House.

If you’re running or setting up a partnership and need expert accounting support, our specialist Partnership Accountants are here to help get in touch today.

How Partnership Works?

UK partnerships, including ordinary partnerships, limited partnerships, and limited liability partnerships or ‘LLPs’ (if run with the aim of making a profit), are transparent for tax purposes. This means that partnerships themselves don’t pay tax but instead each partner (or ‘member’ as they’re referred to in LLPs) is separately taxed on their profit share.

Partnerships must however send tax returns to HMRC, detailing the partnership’s income and expenses and how any profits or losses are shared between the partners.

Things to be included in Partnership Tax Return

The partnership return is made up of an eight-page form covering the most common types of partnership income and if needed supplementary pages covering other types of income and disposals.

The details required for trading partnerships include:

Trading or professional income and expenses (including capital allowances),
Savings, investments and other income,
Foreign income (including interest, dividends and rental income),
UK property income,
Details of chargeable asset disposals,
Partnership statement giving the name, address (or registered office) and tax reference of each partner and their share of partnership profits, losses, other income and any tax deducted, and
A signed declaration by the person making the tax return that to the best of their knowledge and belief the return is correct and complete.

How PRS can assist your Partnership Tax Return

The PRS SMART Accountants personal tax compliance team supports individuals and partnerships, helping them to remain tax compliant.

At PRS we review each individual partners’ situation and provide advice for them on maximizing tax reliefs to improve their tax position. Find out more about our personal tax compliance team here.

If you’d like to discuss your partnership’s tax compliance obligations, the partners’ personal tax compliance, or the many other ways we can support your business, please speak to your usual Saffery contact or get in touch with us using the form below.