A partnership is a type of business owned and run by multiple people, called partners.
Partnerships and limited companies file different kind of tax returns
Limited companies need to file:
- Annual Accounts with the Companies House
- A company tax return with HMRC
Partnerships file:
- Only a partnership tax return with HMRC
- Their partners also have to file individual Self Assessment tax returns with HMRC
Partners and directors of limited companies also earn money and pay taxes differently
- In limited companies, directors can pay themselves a salary (taxed via PAYE) and, after the company pays corporation tax, directors can also pay themselves dividends (taxed through Self Assessment)
- In partnerships, the partners divide the profit between themselves, according to their share – each will then pay Income Tax and National Insurance through a Self Assessment tax return
