Partnership Tax and Tax Planning

We have one of the largest Tax teams in the country and regularly advise on partnership taxation.

We give advice both to existing partnerships on their tax position and to clients seeking to use partnership structures for specific tax-planning reasons.

The taxation of partnerships can involve a complex mix of:

• income tax
• corporation tax
• capital gains tax
• inheritance tax
• stamp duty land tax.

A further dimension may be added by a mix of individual and corporate partners and yet another by the residence and domicile status of the partners. We seek to help you through this maze: deciding whether a partnership structure is the right vehicle and how to adapt the partnership shares to maximise the tax position.

Contentious partnership matters, particularly the retirement of a partner or dissolution of a partnership, also often involve tax aspects.

Despite the complexity of partnership taxation, there are a number of ways in which partnerships can be used for tax-planning. These include:

• using a partnership instead of a company to reduce national insurance contributions
• using a hybrid partnership (with both individual and corporate partners) to fund partnership capital more effectively and allow profits to be taxed at lower corporation tax rates
• adding personal goodwill or other assets to a hybrid partnership to allow tax-efficient profit extraction
• using a "family partnership" or FLP as an alternative to a trust for estate planning reasons.