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HMRC internal manual

Business Income Manual

Partnerships - general notes: partners’ personal expenses

The claim for relief for any expenditure incurred by a partner on behalf of the partnership must be included in the computation of the partnership’s business profits. It is not possible for individual partners to make personal claims, whether to expenses or capital allowances.

This is because revenue expenditure incurred by a partner only qualifies for relief if it is made wholly and exclusively for the purposes of the partnership business. And the only legal basis for giving relief for such expenditure is as a deduction in the calculation of the profits of the partnership business. See BIM37000 onwards for guidance on the ‘wholly and exclusively’ test.

Similarly the only legal basis for giving relief for expenditure qualifying for capital allowances is as a deduction in the calculation of the profits of the partnership business. The exception to this rule is where there is a formal leasing agreement between the partner and the partnership. In these circumstances the allowance is due against the partner’s leasing income.

You should not accept any deductions for expenses from the net profits allocated to a partner.

See BIM82080 for guidance on when an expense met by a partner is an expense of the partnership.