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HMRC internal manual

Property Income Manual

Introduction: basis periods for partnerships

Partners’ rental income: basis periods

For a partner, the basis period used to calculate the rental profits chargeable to tax for any tax year depends on:

  • the type of partnership,

  • the partner’s personal circumstances.

Partners in trading or professional partnership: basis periods

Many trading or professional partnerships have an ancillary source of rental income; for example, a farming partnership may own a farm that it lets to another farmer. For a partner in this type of partnership, the basis period used for rental profits is the same as that used for the trading or professional income.

Example: trading or professional partnership: normal case

For example, suppose the 2005-06 partnership trading profits are based on the year ended 31 December 2005; here the 2005-06 rental business profits should also be computed for the year ended 31 December 2005 and not the year ended 5 April 2006.

Trading or professional partnerships: first and last year & changes of accounting date

Special basis period rules apply for the years in which a partner joins or leaves a partnership and the accounts are not made up to 5 April, or where there is a change of partnership accounting date, see BIM82200.

Partners - investment business

The second type of partnership mentioned in PIM1030 is where the partnership runs an investment business:

  • which does not amount to a trade, and

  • which includes the letting of property or consists entirely of property letting.

For a partnership investment business you always calculate the rental profits for the tax year to 5 April (just like any other rental business).

Further guidance

For detailed guidance on the taxation of partnerships see BIM82000 onwards.