Partnerships: Tax planning guides

Partnerships offer a flexible way to share income and capital profits. This guide provides links to further guides which highlight ways in which partnerships can be used to save tax.

This is a freeview 'At a glance' guide.

Is a partnership an appropriate structure?

There are a number of different options when considering how to trade.  The taxation of a sole trade, partnership and company are different.  A partnership could potentially lead to tax savings.

See Will I pay less tax if I trade in a partnership?

What type of partnership is appropriate?

There are a number of different types of partnership which could be appropriate for your business.  Each has different traits, pros and cons.

See Partnerships: Unlimited or limited?

Partnership agreements

Without a partnership agreement, the partnership is governed by statute.  Creating a bespoke partnership agreement can help to maximise the flexibility that a partnership can offer and also help manage potential conflicts.

See Partnership agreements: What should be considered

See Partnership agreements: A cautionary tale

Partnership income tax planning

Combining a corporate with a Limited Liability Partnership (LLP) could lead to tax savings which can include:

• Profits of LLP individual members are not subject to employers NIC.
• A corporate run alongside an LLP can potentially be used to ‘money box’ profits at the lower corporate tax rates.
• A corporate partner could be used to save tax, subject to anti-avoidance provisions.

See Running an LLP in tandem with a company

Partnership losses

An individual can, subject to anti-avoidance provisions, offset partnership trading losses against their general income.

See Partnerships: Losses

Partnership anti-avoidance provisions

There are a number of different anti-avoidance provisions that need to be considered when using a partnership for tax planning purposes.

These include:

Mixed members: Partnerships with company members

Salaried members: When is a partner taxed as an employee?

Transfer of assets and income streams through partnerships