PIM1040 | Introduction: basis periods for partnerships

Partners’ rental income: basis periods

For a partner, the basis period used to calculate the rental profits chargeable to tax for any tax year depends on:

• the type of partnership,

• the partner’s personal circumstances

Partners in trading or professional partnership: basis periods

Many trading or professional partnerships have an ancillary source of rental income; for example, a farming partnership may own a farm that it lets to another farmer. For a partner in this type of partnership, the basis period used for rental profits is the same as that used for the trading or professional income.

From the tax year 2023-24 trades must report their income on a tax year basis – see the Business Income Manual from page BIM81200.

Example: trading or professional partnership: normal case

For example, suppose the partnership trading profits are based on the year ended 31 December 2019; here the 2019-20 property business profits should also be computed for the year ended 31 December 2019 and not the year ended 5 April 2020.

Trading or professional partnerships: first and last year & changes of accounting date

Special basis period rules apply for the years in which a partner joins or leaves a partnership and the accounts are not made up to 5 April, or where there is a change of partnership accounting date, see PM162000.

Partners - investment business

The second type of partnership mentioned in PIM1035 is where the partnership runs an investment business:

• which does not amount to a trade, and

• which includes the letting of property or consists entirely of property letting

For a partnership investment business you always calculate the rental profits for the tax year to 5 April (just like any other property business).

Further guidance

For detailed guidance on the taxation of partnerships see the Partnership Manual.