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HMRC internal manual

Partnership Manual

Introduction to Partnerships and Partnership Taxation: non trading income (‘other income’)

Where a partnership has a source of non-trade income (‘other income’), the amount of any assessable income is determined as if the partnership was an individual (or company if required), regardless of whether the income is taxed or untaxed, or the source of the income. However, there are different rules for determining the basis period applying to taxed and untaxed ‘other income’. Detailed guidance on this topic is available at BIM82275 onwards. In summary, a common basis of assessment is applied to all untaxed income by treating untaxed ‘other income’ as arising from a ‘second deemed trade’ carried on in parallel to the partner’s first ‘deemed trade’, whilst an actual basis of assessment (6 April to 5 April) is used for any taxed income. Please be aware of the variation to this general rule for partnerships whose partners are all persons liable to Corporation Tax (‘CT partnerships’), details can be found at PM40200.