This freeview 'At a glance' guide is essential reading for anyone thinking about starting up a new partnership.

If you are starting a new business and you want to consider other types of trading vehicle, check out A new business? Start here.

Forming a partnership

You have decided to form a partnership. Where do you go from here? 

Article & link 

What you get 

Partnerships: Unlimited or limited?

This guide considers what a partnership is and how it is defined. There are three types of partnership: unlimited (conventional) partnerships, limited partnerships and limited liability partnerships. All have different attributes: which is best for you? 

When does a partnership exist?

It is not always clear when a partnership exists. Some common arrangements between parties do not always result in a partnership. This guide explores the rules.  

Mixed members: Partnerships with company members

Partnerships aren't restricted to having individuals as their members: companies can be partners too. What needs to be considered? 

Running a LLP in tandem with a company

It is possible to run a Limited Liability Partnership (LLP) or other form of partnership in tandem with a company. Partnerships can also have corporate partners. What needs to be considered?

Employment status: Partners

What is the employment status of a partner in a partnership or a member of a LLP? Are partners/members employed or self-employed?

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

In some circumstances, LLP members are taxed as employees under PAYE. When does this apply? 

Partnership agreements: What should be considered?

You have decided on what type of partnership to form and with whom. Partnership agreements can be invaluable to clarify everyday matters and settle disputes within a partnership. What sort of things should be discussed for inclusion in a partnership agreement? 

 

Once the partnership is formed 

The partnership has commenced in business, attention turns to tax compliance. Do you need to register for VAT, as an employer or as a contractor?

Article & link 

 What you get 

Record keeping & tax: What, how and until when?

All businesses must keep records. What is needed?

Starting in business: VAT

Registering for VAT

Is voluntary VAT registration worthwhile?

When does the partnership have to register for VAT? If it is not obliged to register, is voluntary registration worthwhile? 

Making VAT Digital

All VAT registered businesses will fall within Making VAT Digital from April 2022. 

RTI: Real-Time Information for PAYE

National Living Wage rates/National Minimum Wages rates

Will the partnership have any employees? After registering as an employer, wages will need to be reported to HMRC via RTI. 

CIS: Contractors and Subcontractors

Will the partnership be operating within the construction industry? The Construction Industry Scheme may apply. 

Register of Persons with Significant Control

From 6 April 2016 all companies and Limited Liability Partnerships (LLPs) are required to maintain a register of Persons with Significant Control which must be kept with their statutory records and be available for inspection upon request.

 

What about self-assessment and Income Tax? 

Don't forget the parntership and partners will have self-assessment reporting obligations. 

Article & link 

 What you get 

Self-employment: Registering for Tax

You are self-employed, you have started working for yourself, what do you need to do to now? How to register for tax.

Making Tax Digital

General partnerships are expected to join Making Tax Digital in April 2025. 

Partnerships: How to prepare partnership and partners tax returns

How are partnership profits calculated? How are corporate members of partnerships taxed? What are the differences between the tax treatment of individual and corporate partners? Are there anti-avoidance provisions to consider?

What expenses can I claim?

Different tax rules apply for different types of expense. These guides summarise the rules, advise you on planning points and tax-traps and with worked examples illustrate what you can and can't claim. 

Essential know-how

This section is for the self-employed and is full of tax planning guides and tips & tools together with tax compliance checklists. 

Partnerships: Losses

How are losses treated for partnerships? What loss reliefs are available to partners and what restrictions are there? 

Disputed profit share: What do I put in my return?

Partners are assessed on the profits that they are allocated on the partnership tax return. What happens when there is a partnership dispute?

 

The next steps

Planning for the future. What happens next? 

Article & link 

What you get 

A guide to incorporation: Start here

Incorporation of partnership: Step-by-step

Incorporating an existing business

Has the time come to consider incorporating the partnership? How do you go about incorporation? 

CGT: Rollover Relief

If the partners or partnership are considering disposing of capital business assets standing at a gain, Rollover Relief can defer Capital Gains Tax (CGT) charges. 

Business Asset Disposal Relief (Entrepreneurs' Relief): Disposal of a business

Where partners dispose of all or part of their interest in the partnership, or personal assets used in the partnership, Business Asset Disposal Relief (BADR) can reduce the CGT payable. Early planning is advisable to meet the BADR conditions. 

CGT: Holdover/Gift Relief

If any partners are planning to gift their partnership interest, or assets used in the partnership, Gift Relief can hold over capital gains arising. 

IHT Business Property Relief: Estate planning

Whether partners make lifetime gifts or retain their partnership interests until death, qualifying for Business Property Relief can prevent significant Inheritance Tax liabilities arising. 

 


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