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Loss relief—individual and corporate partners

For both partners liable to income tax and partners liable to corporate tax, a trading loss incurred by a partnership is calculated in the same way as a profit, see B7.401. It is also allocated to partners in the same way as profits¹. For details of the allocation of profit and losses to partners see B7.501 onwards.

Once a partner's share of the tax-adjusted loss has been ascertained and allocated, it is then relieved in accordance with the income or corporate tax loss relief rules (depending upon whether the partner is a corporate partner or not). This may have wider practical implications for non-corporate partners because if, for example, a partner were to die and their losses could not be fully relieved, the unrelieved balance can not be used by any other partner or by any beneficiaries under their will. This even applies when one party to a marriage succeeds to a business on the death of the other.

The effect of a loss is to