Income Tax (Trading and Other Income) Act 2005 section 851

Calculations etc. where firm has other income or losses

Section 851 extends the partnership profit and loss calculation and allocation rules to cover non-trading income or losses that a partnership firm may have.

• Where a partnership carries on a trade and the standard profit/loss calculation and allocation rules (sections 849 and 850) apply, those same rules also cover any other income or losses the firm may have
• Non-trading income could include items such as investment income, rental income or interest received by the partnership
• The rules treat references to trading profits or losses as if they referred to the firm's other income or losses, ensuring consistent treatment across all income streams
• Each partner's share of the firm's non-trading income or losses is therefore calculated and allocated in the same way as their share of trading profits or losses