Part 9U.K.Partnerships
Modifications etc. (not altering text)
C1Pt. 9 applied (1.4.2010) by Income Tax Act 2007 (c. 3), ss. 809BZH(2)(a), 809BZK(4)(a) (as inserted (with effect in accordance with s. 381(1) of the amending Act) by Taxation (International and Other Provisions) Act 2010 (c. 8), s. 381(1), Sch. 5 para. 3 (with Sch. 9 paras. 1-9, 22))
C2Pt. 9 modified (with effect as mentioned in Sch. 6 para. 6(2)-(7) to the amending Act) by Income and Corporation Taxes Act 1988 (c. 1) , s. 774D(4) as inserted by Finance Act 2006 (c. 25), s. 76, Sch. 6 para. 6(1)
Calculation of partners' sharesU.K.
849Calculation of firm's profits or lossesU.K.
(1)If—
(a)a firm carries on a trade, and
(b)any partner in the firm is chargeable to income tax,
the profits or losses of the trade are calculated on the basis set out in subsection (2) or (3), as the case may require.
(2)For any period of account in which the partner is a UK resident individual, the profits or losses of the trade are calculated as if the firm were a UK resident individual.
(3)For any period of account in which the partner is non-UK resident, the profits or losses of the trade are calculated as if the firm were a non-UK resident individual.
[F1(4)In calculating under subsection (2) or (3) the profits of a trade for any period of account no account is taken of any losses for another period of account.]
Textual Amendments
F1S. 849(4) inserted (with effect in accordance with s. 1329(1) of the amending Act) by Corporation Tax Act 2009 (c. 4), s. 1329(1), Sch. 1 para. 639 (with Sch. 2 Pts. 1, 2)
[F2850Allocation of firm's profits or losses between partnersU.K.
(1)For any period of account a partner's share of a profit or loss of a trade carried on by a firm is determined for income tax purposes in accordance with the firm's profit-sharing arrangements during that period.
This is subject to sections 850A and 850B.
(2)In this section and sections 850A and 850B “profit-sharing arrangements” means the rights of the partners to share in the profits of the trade and the liabilities of the partners to share in the losses of the trade.
Textual Amendments
F2Ss. 850-850B substituted for s. 850 (with effect in accordance with s. 1329(1) of the amending Act) by Corporation Tax Act 2009 (c. 4), s. 1329(1), Sch. 1 para. 640 (with Sch. 2 Pts. 1, 2)
850AProfit-making period in which some partners have lossesU.K.
(1)For any period of account, if—
(a)the calculation under section 849 in relation to a partner (“A”) produces a profit, and
(b)A's share determined under section 850 is a loss,
A's share of the profit of the trade is neither a profit nor a loss.
(2)For any period of account, if—
(a)the calculation under section 849 in relation to A produces a profit,
(b)A's share determined under section 850 is a profit, and
(c)the comparable amount for at least one other partner is a loss,
A's share of the profit of the trade is the amount produced by the formula in subsection (3).
(3)The formula is—
where—
FP is the amount of the firm's profit calculated under section 849 in relation to A,
PP is the amount determined under section 850 to be A's profit, and
TCP is the total of the comparable amounts attributed to other partners under step 3 in subsection (4) that are profits.
(4)The comparable amount for each partner other than A is determined as follows.
Step 1
Take the firm's profit calculated under section 849 in relation to A.
Step 2
Determine in accordance with the firm's profit-sharing arrangements during the relevant period of account the shares of that profit that are attributable to each of the other partners.
Step 3
Each such share is the comparable amount for the partner to whom it is attributed.
(5)In subsections (2) to (4) “partner” means any partner in the firm, whether or not chargeable to income tax.
Textual Amendments
F2Ss. 850-850B substituted for s. 850 (with effect in accordance with s. 1329(1) of the amending Act) by Corporation Tax Act 2009 (c. 4), s. 1329(1), Sch. 1 para. 640 (with Sch. 2 Pts. 1, 2)
850BLoss-making period in which some partners have profitsU.K.
(1)For any period of account, if—
(a)the calculation under section 849 in relation to a partner (“A”) produces a loss, and
(b)A's share determined under section 850 is a profit,
A's share of the loss of the trade is neither a profit nor a loss.
(2)For any period of account, if—
(a)the calculation under section 849 in relation to A produces a loss,
(b)A's share determined under section 850 is a loss, and
(c)the comparable amount for at least one other partner is a profit,
A's share of the loss of the trade is the amount produced by the formula in subsection (3).
(3)The formula is—
where—
FL is the amount of the firm's loss calculated under section 849 in relation to A,
PL is the amount determined under section 850 to be A's loss, and
TCL is the total of the comparable amounts attributed to other partners under step 3 in subsection (4) that are losses.
(4)The comparable amount for each partner other than A is determined as follows.
Step 1
Take the firm's loss calculated under section 849 in relation to A.
Step 2
Determine in accordance with the firm's profit-sharing arrangements during the relevant period of account the shares of that loss that are attributable to each of the other partners.
Step 3
Each such share is the comparable amount for the partner to whom it is attributed.
(5)In subsections (2) to (4) “partner” means any partner in the firm, whether or not chargeable to income tax.]
Textual Amendments
F2Ss. 850-850B substituted for s. 850 (with effect in accordance with s. 1329(1) of the amending Act) by Corporation Tax Act 2009 (c. 4), s. 1329(1), Sch. 1 para. 640 (with Sch. 2 Pts. 1, 2)
851Calculations etc. where firm has other income or lossesU.K.
(1)This section applies if—
(a)sections 849 and 850 apply in relation to the profits or losses of a trade carried on by a firm, and
(b)the firm has other income or losses.
(2)Those sections also apply as if references to the profits or losses of the trade were references to the other income or losses.