Partnership trading profit allocation (UK tax)
A partnership’s tax-adjusted trading profit or loss for a period of account is generally allocated among partners according to the commercial profit-sharing arrangements in force for that period. Each partner’s share is then assessed under the rules applicable to that partner; income-tax and corporation-tax calculations can differ.
Worked example
Two individual partners agree to share tax-adjusted trading profit 60:40 throughout the period. If the adjusted profit is £100,000 and no special allocation rule applies, their shares are £60,000 and £40,000 before each partner’s own tax-year assessment.
Common mistake
Taxing the partnership’s entire profit as though it were the personal profit of each partner, or ignoring a change in the sharing arrangements during the accounting period.
Where it appears in your exams
| Qualification | Exam | Relationship | Period |
|---|---|---|---|
| ACCA | TX (UK) | Direct | June 2026–June 2027 |