
Paper F6 (UK): Taxation FA2009
206 Go to www.emilewoolfpublishing.com for Q/As, Notes & Study Guides © EWP
Note that the balance of the partnership loss is the adjusted loss of the partnership
after capital allowances, plus the partners’ salaries and income on capital. This
balancing loss is shared between the partners in their profit-sharing ratio.
3.2 The loss relief options available to each partner
Each partner can choose to use his share of the loss in the most beneficial way. There
is no requirement for all partners to utilise their losses in the same way.
The options available are the same as those available to a sole trader, and depend on
whether the partner is joining the firm, leaving the firm or is an ongoing partner.
In summary, the options are as follows:
Opening years Ongoing years Closing years
= When the partner joins
the firm, the first four tax
years
The partner is in at least his
fifth tax year and continues
to be a partner
= When the partner
leaves the firm
s64 claim (plus
additional relief if loss
arises in 2009/10)
s64 claim (plus additional
relief if loss arises in 2009/10)
s64 claim (plus
additional relief if loss
arises in 2009/10)
s261B extension claim s261B extension claim s261B extension claim
s83 carry forward s83 carry forward s86 claim if business
incorporated
s72 claim s89 claim
Note that where an individual carries on a trade in a non-active capacity (e.g. is a
‘sleeping’ partner) the loss relief available under s64 and s72 is restricted to a
maximum of £25,000.
An individual is classed as non-active for this purpose if he spends less than 10
hours a week on average on the trading activities of the business.
3.3 Limited liability partnerships
A limited liability partnership (LLP) is a partnership whereby the partners’ liability
to contribute towards the partnership debts and losses is limited in the partnership
agreement.
A partner in an LLP is taxed in the same way as a partner in a normal partnership.
However, the amount of loss that can be relieved against non-partnership income is
restricted to the total contribution to the business by that partner by the end of the
tax year against which a claim for loss relief is being made.
The total contribution of a partner is the total capital introduced to the business by
him plus his share of any profits earned while he has been a partner less any
drawings by him.