Partnerships
In a business partnership? Here is how your share is taxed
A partnership does not pay tax itself. It sends its own return (SA800) showing the profit and how it is split, and each partner is then taxed on their share as if it were self-employed profit: Income Tax on top of any other income, plus Class 4 and Class 2 National Insurance. Your share goes on the partnership pages (SA104) of your own tax return. This page works out your bill, explains the two returns and who sends which, and walks through your pages box by box.
How partnership tax works
1. Two returns, one nominated partner
The partnership return (SA800) is sent once, by the nominated partner, with the partnership’s accounts and a statement showing each partner’s share. Every partner then sends their own personal return with the partnership pages. Both are due by 31 January online.
2. Your share, not your drawings
You are taxed on your share of the profit as set by the partnership agreement (or equally if there is none), whether or not you took the money out. Drawings are not income and are not deducted; the profit is.
3. Taxed like self-employed profit
Your share is added to your other income and taxed at the normal Income Tax rates after the £12,570 Personal Allowance. Losses can be set against your other income or carried forward against future shares.
4. National Insurance too
Class 4 at 6% on the share above £12,570, worked out by HMRC from your return. Class 2 counts as paid, at no cost, once the share is over £6,845; below that you can pay it voluntarily (£3.50 a week) to protect your State Pension record.
5. Payments on account
Because nothing is deducted at source, a bill over £1,000 brings payments on account: half of this year’s bill on 31 January with the balance, the other half on 31 July, towards next year. The first year is the expensive one.
6. Registering
New partners register for Self Assessment and Class 2 with form SA401 (the nominated partner registers the partnership itself with SA400) by 5 October after the end of the first tax year of trading. Both are online.
A worked example (2025/26)
Tom’s share of his partnership’s profit is £30,000, and he has no other income.
- £30,000 less the £12,570 Personal Allowance leaves £17,430 to tax at 20%: £3,486.00 of Income Tax.
- Class 4 National Insurance at 6% on £30,000 above £12,570: £1,045.80.
- Class 2 costs nothing, because his share is over £6,845; the year still counts towards his State Pension.
- Total £4,531.80, and because it is over £1,000 with nothing deducted at source, two payments on account of £2,265.90 follow: £6,797.70 to pay on 31 January, and £2,265.90 on 31 July.
Work out your own bill
Enter your share of the profit and, if you have a job or pension too, that income and the tax already taken off it. We show the Income Tax, the National Insurance, what to pay and when, and the partnership pages box by box.
Your figures
From your P60s. Leave blank if the partnership is your only income.
Also on the P60. It is credited against the bill.
Registering and filing, step by step
- 1
Register the partnership and yourself
The nominated partner registers the partnership online (form SA400) and gets a partnership UTR. Each partner registers themselves (form SA401) and gets a personal UTR. Deadline: 5 October after the end of the first tax year.
- 2
Keep the partnership’s records
Takings, expenses and how the profit is split. The partnership return needs accounts to 5 April (or the accounting date), and each partner’s share from them.
- 3
The nominated partner sends the SA800
The partnership return, with a partnership statement for each partner. Free HMRC software does not cover it; commercial software or a paper return by 31 October is needed. The penalty for a late SA800 is charged on every partner.
- 4
Each partner sends their own return
Online by 31 January, with the partnership pages (SA104) copied from the statement, plus pages for any other income. Our walkthrough maps every page.
- 5
Pay, and plan for payments on account
The balance and the first payment on account by 31 January, the second by 31 July. If profits fall, reduce the payments on account online rather than overpaying.