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Completing Partnership Tax Returns
If you're a partner in a business partnership, you need to report your share of partnership income and expenses through Self Assessment. The partnership itself must file a separate Partnership Tax Return, and each partner must then report their individual share on their person...
Introduction
If you're a partner in a business partnership, you need to report your share of partnership income and expenses through Self Assessment. The partnership itself must file a separate Partnership Tax Return, and each partner must then report their individual share on their personal Self Assessment tax return.
Who needs to file what
When you're part of a partnership, two types of tax returns are required:
The Partnership Tax Return – One return for the partnership as a whole, showing the partnership's total income and expenses for the tax year. The partnership is responsible for filing this, though usually one partner (called the 'nominated partner') takes responsibility for submitting it on behalf of everyone.
Individual Self Assessment tax returns – Each partner must file their own personal tax return, reporting their share of the partnership profits (or losses) and paying any Income Tax and National Insurance due on those profits.
You must tell HMRC about any income you receive from a partnership in your Self Assessment tax return.
Working out the partnership's taxable profits
Before you can complete your individual tax return, the partnership needs to calculate its taxable profits. This means working out total income and deducting allowable business expenses.
Partnerships can use either:
- Traditional accounting (accruals basis) – income and expenses are recorded when invoiced, not when money actually changes hands
- Cash basis accounting – a simpler method where you record income and expenses only when money is actually received or paid
Once the partnership has calculated its total taxable profit, this amount is divided between the partners according to the partnership agreement (which sets out each partner's profit share).
Capital allowances for partnerships
Partnerships can claim capital allowances on qualifying business assets such as equipment, machinery, and vehicles. These allowances reduce the partnership's taxable profits before they're divided among partners.
Capital allowances are claimed by the partnership as a whole on the Partnership Tax Return, not by individual partners on their personal returns.
Completing your individual partner tax return
Once the partnership has worked out the total profits and your share has been calculated, you need to report this on your personal Self Assessment tax return.
You'll need to include:
- Your share of partnership profits (or losses)
- Your share of any partnership income that's already had tax deducted
- Details of the partnership itself, including its Unique Taxpayer Reference (UTR)
The income you report will be added to any other income you have and taxed according to Income Tax rates and bands for the 2025/26 tax year. You'll also need to pay Class 2 and Class 4 National Insurance contributions on your partnership profits.
Claiming reliefs and allowances as a partner
Several tax reliefs may be available to reduce the tax you pay on partnership income:
Relief for trading losses – If the partnership makes a loss, you may be able to offset your share of that loss against other income or carry it forward to future years.
Income Tax reliefs limit – Some reliefs you claim have an overall cap, so you need to be aware of the total amount of relief you're claiming across all sources.
Farmers and market gardeners – Special rules and reliefs apply if your partnership is a farming business.
Averaging relief for creators – Authors and artists can average their profits over multiple years to smooth out fluctuating income.
These reliefs are claimed on your individual Self Assessment tax return, not on the Partnership Tax Return.
Specialist situations
Certain partnerships have additional considerations:
Multiple businesses – If you're a partner in more than one partnership, or you run other businesses alongside your partnership income, you need to report each business separately on your tax return.
Non-resident entertainers or sportspersons – Special tax rules apply if you're a non-UK resident working as an entertainer or sportsperson in partnership.
Medical and agricultural partnerships – Doctors' partnerships and farming partnerships have specific rules around allowable expenses and stock valuation.
Using accounts information
When completing either the Partnership Tax Return or your individual return, you'll need to extract the right figures from the partnership accounts. This includes correctly categorising income and expenses, and understanding which items go where on the tax return forms.
The partnership should maintain proper accounting records throughout the year to make completing tax returns straightforward. This includes keeping receipts, invoices, bank statements, and records of all business transactions.
Deadlines and responsibilities
The nominated partner is responsible for ensuring the Partnership Tax Return is filed by the deadline – 31 January following the end of the tax year for online returns (or 31 October for paper returns).
Each individual partner is responsible for filing their own Self Assessment tax return and paying their tax by the same deadlines. Even if the partnership return is late, you still need to file your personal return on time.
Remember that you're each individually responsible for reporting your partnership income correctly, even if you rely on the partnership accounts prepared by someone else.
Sources
This article provides general guidance based on current HMRC rules. For advice specific to your situation, speak to your accountant.