Partnerships

Taxed

• collection of sole traders

• Allocate profit/ loss to each partner

• Each partner taxes on own share of profit / losses relieved individually

Trading profits

Computing adjusted profit

• same as sole traders

• Account for Partners appropriations that are not deductible (drawings)

• CAs on partners own assets deducted from partnership as a whole

Allocate partnership profits between partners

• split adj profits/ losses using PSA for period of account

• Salaries (drawings) / interest on capital (advance of profits- not real salaries) first, then PSR for residue

Change in PSA

• Prorate adj profits before applying relevant PSA

Tax position of individual partners

Each taxed as a sole trader

Losses

• divide loss as per PSA

• Each partner then chooses how they relieve their losses

• Normal loss relief options available incl opening year loss relief