Income Tax (Trading and Other Income) Act 2005 section 849

Calculation of firm's profits or losses

Section 849 sets out the basic rules for calculating the profits or losses of a partnership trade, depending on whether the individual partner is UK resident or non-UK resident.

• Where a partner is a UK resident individual, the firm's trading profits or losses are calculated as if the firm itself were a UK resident individual.
• Where a partner is non-UK resident, the firm's trading profits or losses are calculated as if the firm were a non-UK resident individual.
• In a split year — where a partner is UK resident for part of the tax year — the partner is treated as non-UK resident for the overseas part of that year.
• When calculating profits for any period of account, losses arising in a different period of account are not taken into consideration.