Partnerships are subject to various taxes and national insurance contributions (NICs) in the UK. Here are some of the main taxes and NICs that partnerships may face:
Income tax: Partnerships are not taxed as separate entities, but instead the profits and losses are distributed to the partners and taxed on their individual tax returns. Partners must register for self-assessment and file tax returns by the relevant deadlines.
National insurance contributions: Partners are also required to pay NICs on their share of the partnership's profits. The amount of NICs depends on the partner's earnings and the relevant contribution rates.
Value-added tax (VAT): Partnerships may need to register for VAT if their annual turnover exceeds the VAT threshold (£85,000 in 2023/24). VAT is charged on most goods and services in the UK, and the partnership must charge VAT to customers and pay VAT on purchases if it is registered.
Capital gains tax (CGT): Partners may be subject to CGT if they sell certain assets of the partnership, such as property or shares, at a profit. The rate of CGT depends on the type of asset and the individual's tax status.
Stamp duty land tax (SDLT): Partners may need to pay SDLT if they purchase or lease certain types of property or land in the UK. The amount of SDLT depends on the purchase price or lease value.
Employer's NICs: If the partnership employs staff, it may need to pay employer's NICs on their salaries or wages as a normal employer.