How UK Partnerships Can Handle Tax Filing with Ease

In this article, we’ll break down what exactly a Partnership Tax Return is, who must file one, when it’s got to be filed, and what this type of tax return must include.

What is a Partnership Tax Return?

A Partnership Tax Return or form SA800 is a formal declaration of a partnership's income, expenses, profits, and losses over the course of the financial year.

Partnerships, unlike sole traders or limited companies, aren’t considered separate legal entities from their owners. Instead, the partners themselves are individually responsible for the business' finances and tax liabilities.

Who needs to file a Partnership Tax Return?

All partnerships in the UK are obligated to file a Partnership Tax Return each year. This includes general partnerships, limited partnerships, and Limited Liability Partnerships (LLPs):

General Partnership:

This is a business structure where two or more individuals (partners) come together to operate a business for profit. In a general partnership, the partners share responsibilities, decision-making, and the profits and losses of the business.

Limited partnerships:

Unlike general partners, limited partners' liability is restricted to the amount they have invested in the business.

Limited Liability Partnerships (LLPs):

This is a business structure that combines elements of a partnership and a limited company. LLP partners have limited personal liability, protecting their personal assets from business debts, similar to a limited company. LLPs are required to file their accounts with Companies House, along with the Partnership Tax Return. This includes a balance sheet and a profit and loss account.

Unlike general partnerships, all partners in an LLP enjoy this liability protection while still retaining the flexibility in management and tax treatment typically associated with partnerships. This differs from both general and limited partnerships, where personal liability is unlimited for at least some partners.

When to file a Partnership Tax Return?

Just like the self-assessment tax return deadline, the deadline for submitting your online Partnership Tax Return in the UK is 31st January, and it’s a few months earlier (31st October) if you’re submitting a paper SA800 form.

Note: It's always crucial to be aware of the deadline and get your tax return filed before it comes, as the consequences of late filing or payment can result in penalties, interest, and even legal action.

What information do you need to provide in a Partnership Tax Return?

Some of the most important info disclosed in form SA800 includes:

• Income: This keeps all forms of revenue generated by the partnership, such as sales, services, investments, and any other sources of income.
• Expenses: Keep track of your deductible business expenses throughout the year, including overhead costs, wages and other operational expenditures, to calculate your partnership's taxable profit accurately.
• Capital allowances: If your partnership owns assets used in the business, you may be eligible for capital allowances, which will reduce how much tax you need to pay
• Interest and charges: Any interest or charges incurred by the partnership, such as loan interest, should be recorded for tax purposes.
• Losses: If your partnership incurred losses during the financial period, these can be offset against profits in other periods, potentially reducing your overall tax liability.
• Capital gains: If your partnership disposed of assets that resulted in capital gains, these need to be reported as they may be subject to capital gains tax.

Paying tax

The partnership does not pay tax or National Insurance contributions (NIC). The partners are allocated a share of the profit or losses from the partnership based on the profit-sharing ratio. Tax and self-employed National Insurance contributions (NIC) will be calculated on an individual basis for each partner, with the payment dates following the self-assessment rules.

Penalties for non-compliance

Late filing penalties can range from fixed amounts to daily charges, depending on how late the return was filed. On top of that, interest may accrue on any outstanding tax liabilities.

Important deadlines that you need to know as someone self-employed

• Registering as self-employed - October 5th
• Paper tax returns - October 31st
• Online tax returns - January 31st
• Deadline for paying tax owed - January 31st

If you want any tax you owe to be automatically taken from your PAYE wage or from a pension, then you must submit your tax return by December 30th.

Please note that this payment method is only for those who are eligible.

Supplementary forms or pages

• Self-Assessment: Partnership Statement (full) (SA800(PS))
• Self-Assessment: Partnership Trading and Professional Income (SA800) (TP)
• Self-Assessment: Partnership UK property (SA801)
• Self-Assessment: Partnership Foreign (SA802)
• Self-Assessment: Partnership disposal of chargeable assets (SA803)
• Self-Assessment: Partnership savings and investments and other income (SA804)

How to file Partnership Tax Return using Taxd

Taxd is a UK online tax software designed to make the tax filing process easy and smooth.

So first, you need to go to Taxd Intro, answer a few introductory questions, and log in to your account.

Then, these are the three sections you need to complete:

1. Partnership details: Enter details such as your partnership name and UTR.

2. Trading: Here, we will ask a few questions about your income.

3. General: In this, provide information about your taxed and untaxed income.

That’s it. Review all the information you've entered before submitting.

Conclusion

Knowing how partnership tax returns work is crucial for businesses collaborating in the UK. Timely and accurate filing ensures compliance with tax regulations and guarantees the business pays the correct amount of tax.

To make things easier, you can consider using Taxd for partnership tax filing in the simplest manner.

FAQs

1. Do partnerships have to file tax returns in the UK?

Every tax partnership in the UK has to file a tax return by the paper or digital deadline. HMRC automatically sends a fine to those who don't submit on time. However, you can appeal for a reduction or nulled penalty.

2. How do I file a tax return for a partnership in the UK?

The partnership itself isn't taxed. Money passes straight to each of you, and you have to submit a self-assessment tax return on time, just as if you were self-employed. Your partnership Income Tax return uses an SA800 form to declare these finances and tell HMRC how the profit has been split.

3. Do partnerships have to file accounts in the UK?

A general partnership does not need to file annual accounts. On the other hand, LLPs must file certain information with Companies House.