Partnership

A partnership is a type of business that is owned and run by multiple people, known as partners.

Partnerships and limited companies file different kind of tax returns

Limited companies need to file:

  • Annual Accounts with the Companies House
  • A company tax return with HMRC

Partnerships file:

  • Only a partnership tax return with HMRC
  • Their partners also have to file individual Self Assessment tax returns with HMRC

Partners and directors of limited companies also earn money and pay taxes differently

  • In limited companies, directors can pay themselves a salary (taxed via PAYE) and, after the company pays corporation tax, directors can also pay themselves dividends (taxed through Self Assessment)
  • In partnerships, the partners divide the profit between themselves, according to their share – each will then pay Income Tax and National Insurance through a Self Assessment tax return

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