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
• they also have to file a company tax return with HMRC
• partnerships file only a partnership tax return with HMRC
• and their partners also have to file individual Self Assessment tax return 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.