Non-active partners in both general partnerships and LLPs.Restrictions on sideways loss relief can apply to: In most cases, trade losses can be set against a partner’s other taxable income (known as “sideways” loss relief). Management expenses arising in an investment partnership are generally disallowed under income tax rules but allowed under corporation tax rules. Non-trading income, for example property rental income, is usually reported on the partnership tax return for the tax year of receipt (i.e. Where a partnership carries on a trade, the profits of the trade are included in each UK tax year according to the ‘basis period’ rules, which usually follow the partnership’s accounting year-end. Under income tax rules, interest is taxed when received, whereas under corporation tax rules, interest is subject to tax in the period in which it is due to be received, irrespective of the date of receipt. The most common difference arising between income and corporation tax rules is the treatment of interest receivable. Similarly, any partnerships that have a corporate partner should prepare separate calculations according to corporation tax rules rather than income and capital gains tax rules (which will continue to apply to all individual partners).

Non-resident partners are only subject to UK tax on UK-source investment income and profits generated by the partnership, and separate calculations should be prepared on the non-resident basis for partners who are resident overseas, where relevant. However, it must still prepare and submit a tax return which details the taxable profits of the partnership and how those profits are split between the partners.

The partnership itself does not pay income or capital gains tax. This means that the individual partners are subject to tax on their share of the profits realised in the partnership. The course and instruction delivery are geared toward a basic understanding and progress to more complex issues via Surgent’s “Step-by-Step” preparation guide.Partnerships are transparent for income tax purposes. We bring it all together in the final two chapters with a comprehensive example that integrates and links all previous chapters. Within each chapter, we illustrate various parts and areas of interest when preparing a 1065, including examples and corresponding tax forms. Common to advanced issues of partnerships are explored in the current course that can double as a quick and practical reference guide for tax treatment and tax preparation guidelines. The objective of this course is to train new, rusty, or returning-to-practice staff with a hands-on, pencil-pushing gold standard for preparing Form 1065.

Partnership tax return example