Income Tax (Trading and Other Income) Act 2005 section 854

Carrying on by partner of notional business

Section 854 explains how each partner in a trading firm is treated as carrying on their own separate "notional business" in respect of their share of the firm's untaxed non-trading income or relievable losses, and sets out when that notional business starts and ends.

• Each partner's share of untaxed non-trading income or relievable losses from a trading firm is treated as profits or losses of a separate "notional business" carried on by that partner alone.
• The notional business begins at the later of the partner joining the firm or the firm starting to trade, and it ends at the earlier of the partner leaving the firm or the firm permanently ceasing to trade.
• The notional business continues even if individual income sources within it start and stop, or if no income arises in a particular tax year.
• A change in the partner's UK residence status is treated as a permanent cessation of one notional business and the immediate start of another.