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New partners and commencement of partnership

This guidance note details the loss relief available to individual partners in the opening four years of the partnership.

If the partnership makes a loss and consequently a loss is allocated to a new partner, then special rules apply if the partner is not a corporate partner. The new partner will be treated as a sole trader who commences a business and makes a loss in the early years, see the Sole trader loss relief ― opening years guidance note. The rules which follow apply to new partners joining an existing partnership and the commencement of a new partnership in the same way as they apply to sole traders.

For corporate partners the position is much simpler. The loss allocated to it is included in the company self-assessment tax return. Where the period for which the partnership makes up accounts does not coincide with the company’s accounting period, the amounts are apportioned to the company’s accounting