Partnership Losses

Question 1

New partner joins partnership

Answer 1

Opening year rules apply - make sure to split losses correctly can not have overlap losses

Early loss relief applies. Losses of the first 4 years of trading can be offset against total income of the previous three tax years on a FIFO basis

Question 2

What is a non active member

Answer 2

A Partnership who does not spend at least 10 hours a week on average working at the partnership

Question 3

What are the restrctions for non active memebrs

Answer 3

The maximum value of any loss relief that can be claimed in the first 4 years of trading is restricted to the amount of capital that the partner contributed into the partnership

The maximum amount of relief allowable under sideways loss relief and capital gains tax relief is £25,000

Remember for the first 4 years both restrcitions apply. If capital contributed is 60,000 still a £25,000 per annum allowed.

Question 4

What are the restrictions for a member of a LLP

Answer 4

The maximum amount of sideway loss relief or capital gain relief is restrcicted to the individuals contribution

Question 5

What are the restrictions for a non active memeber of an LLP

Answer 5

The maximum amount of sideway loss relief or capital gain relief is restricted to the lower of:

25,000
or
Memeber unrelived contribution

Question 6

Steve contributed £20,000 and offered £10,000 on winding up

Answer 6

First 4 days years take the £20,000
Thereafter take £30,000

Question 7

Disguised employment (LLP)

Answer 7

Disguised salary - over 80% of the salary paid to the partner is fixed

No significant influence of the affairs of the LLP

No significant contribution to the LLP (The investment into the partnership is less than 25% of the salary paid.)

All three must apply