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The tax law and compliance requirements for partnerships can be quite complex. There are lots of regulations to consider and the best approach is to be proactive with receiving the right advice, so that you and your partner/s can structure and operate the partnership in the most tax efficient way possible.

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Whether you're setting up a new or joining an existing partnership, we can help you to navigate the complexities of partnerships and ensure that you or your business is fully compliant with HMRC.

'Give your business the best chance of success by taking a proactive approach towards your business finances'

UNDERSTANDING THE TAXATION OF UK PARTNERSHIPS

A partnership generally exists where two or more individuals work together in business with a common view to making a profit.

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The arrangement is not that of an employer/employee, rather all of the individuals invest in the business and share in the overall responsibility for the business.

 

If the business does well, the individuals will each have a share in the profits, and equally if the business does poorly they will share the losses.

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Partnerships are by law required to register with HM Revenue and Customs and to submit annual partnership returns by the normal self-assessment deadline. Failure to do so can result in penalties being imposed by the Revenue.

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The individual partners are also required to register for self-assessment and to submit their annual tax returns by the normal self-assessment deadline. Failure to do so will result in additional penalties and interest being charged.

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  • What is self-assessment?
    Self-assessment is a system or regime by which Her Majesty’s Revenue & Customs (HMRC) assesses and collects direct tax in the UK.
  • Should I complete a self-assessment tax return?
    Most people who pay income tax in the UK do not have to complete self-assessment tax returns. These are primarily employees whose tax is deducted at source under the Pay as you Earn system (PAYE). Self-assessment therefore applies to individuals such as the self-employed (sole traders) who earn in excess of £1,000, landlords that receive rental property income, individuals who receive income from savings, investments and dividends, foreign income, income from tips and commission and any other type of untaxed earnings.
  • When are self-assessment tax returns due?
    The UK tax year starts on 6 April each year and ends on 5 April of the following year. Self assessment returns are due on the 31 January following the end of the tax year. For individuals who wish to submit paper returns, the deadline is 31 October following the end of the tax year.
  • What are payments on account?
    Payments on account are amounts that some individuals are required to pay towards their estimated tax liability for the current tax year. They are calculated based on the previous tax years liability and are paid in two equal instalments of 50% each on the 31st January and the 31st July. These amounts are then deducted from the final liability for the year and a balance payment is usually made, together with a first payment on account for the following tax year.
  • How do I get the ball rolling?
    As a starting point, you would need to register with HMRC in order to receive your 10 digit Unique Tax Payer Reference number (UTR). This number will enable you to submit your tax returns online by the 31st January deadline. If you are completing your own tax return, you would need to create an online account with HMRC once you receive your UTR number. Alternatively, if you need to help and support with getting your tax affairs complete and up to date then please get in touch for your free consultation.

HOW CAN WE HELP?

Business Meeting

The tax law and compliance requirements for partnerships can be quite complicated. If you are considering setting up a new partnership or joining an existing partnership, we suggest that you contact us as soon as possible.

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We can help you to navigate the complexities of partnerships and ensure that you or your business is fully compliant with HMRC.

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Our Comprehensive Service Includes the Following: 

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  • Registering your partnership and individual partners with HM Revenue & Customs.

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  • Reviewing your partnership agreement and offering expert advice and feedback.

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  • Analysing your year-end accounts and making the relevant adjustments for tax, in line with current legislation.

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  • Optimising the use of capital allowances.

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  • Preparing and submitting the individual partners annual self-assessment tax returns.

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  • Preparing and submitting your annual partnership tax return.

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  • Calculating and advising on partner balancing payments or tax repayments and, where applicable, any payments on account due by the deadlines.

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  • Allocating partnership losses in a tax-efficient manner.

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  • Providing effective tax planning for current and future tax years.

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  • Offering expert advice on all partnership related matters.

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