Income Tax (Trading and Other Income) Act 2005 section 848

Assessment of partnerships

Section 848 establishes that, for income tax purposes, a partnership firm is not treated as a separate entity from its individual partners.

• For income tax, a firm is not regarded as an entity separate and distinct from its partners, unless specifically stated otherwise.
• The income of the firm is treated as the income of the individual partners, not of the firm itself.
• For English law partnerships this confirms the existing legal position, but the rule is particularly important for Scottish firms, which do have separate legal personality under Scottish law.
• The provision ensures that all partnerships across the UK are treated consistently for income tax purposes, regardless of the legal system under which they are established.