Income Tax Act 2007 section 106

Meaning of "limited partner"

Section 106 defines what it means to be a "limited partner" for the purposes of the sideways loss relief restrictions.

• A limited partner in a partnership registered under the Limited Partnerships Act 1907 is someone who cannot take part in managing the business and whose liability for the firm's debts is capped at a specified amount.
• A limited partner in any other type of firm is someone who is similarly excluded from management and whose liability for the firm's debts is limited under the rules governing that particular firm.
• The definition is relevant because limited partners face restrictions on the amount of trading losses they can set against other income.
• The section uses the concept of an individual's "contribution to the firm" rather than "contribution to the trade", reflecting a broader and more consistent drafting approach.