salaried partner

billozz

hi all our accountant has informed us that our brother who works with us ( my other brother and i run a partnership)can be referred to as a salaried partner and treated as one when it comes to our tax return, i've never heard of this, is he correct?
thank you
Bill

Mattygroves2

billozz wrote: »

hi all our accountant has informed us that our brother who works with us ( my other brother and i run a partnership)can be referred to as a salaried partner and treated as one when it comes to our tax return, i've never heard of this, is he correct?
thank you
Bill

Depends on the partnership agreement but salaried partners are common. They tend to be people on a fixed profit share rather than it being variable dependent on profits. It saves on employers NI as they aren't an employee.

billozz

thanks for the reply, ok i hadn't heard of it, so how would he be shown on our tax return? as an expense?

Mattygroves2

billozz wrote: »

thanks for the reply, ok i hadn't heard of it, so how would he be shown on our tax return? as an expense?

No he is a partner but just one with a fixed profit share. He'll need to include his share on his tax return too.

You do need to check your partnership agreement though and make sure he is OK being on a fixed share.

TBagpuss

In my experience, a salaried partner is normally an employee but one who has status as a partner for dealing with dealing with clients/customers.

you would need to make sure that your partnership agreement is consistent with the tax returns, and that your brother is happy with the change.

What is his current status? Is he a partner, or an employee, or a contractor? What benefit does your accountant suggest changing his status will have for him / for you?

Being a partner can mean differences in tax (self employed vs. salary, and lower NI, but also less security and higher risk.

Get the accountant to talk you through why they are recommending it.

Mattygroves2

I've seen it used in accountancy practices and is a way of both giving status and also avoiding employers NI plus the individuals are self employed so pay class 4 NI. There is also the possibility of providing cars without having to pay BIK.

Dead_keen

What type of partnership do you have?

If it a general partnership (so you have unlimited liability) then you need to make sure you really trust him and each other as you will joint and several liability for all the debts. If you are relaxed about that then you save employer's NIC and he pays tax on a self-assessment basis. As others say, you might want to update your partnership agreement (or get one) to cover what ever is important to you.

If your partnership is a limited liability partnership, you need to ask your accountant which of Conditions A, B or C don't apply. If your accountant is not sure of the question, find someone else to give your tax advice.

billozz

i appreciate all your replies and will be talking it over with all partners and our accountant. on a side issue is it possible to view a partnership return online? the actual return not just a summary
thanks again

billozz

guess there isnt then

purdyoaten

billozz wrote: »

guess there isnt then

There is but on through the HMRC website. You need specialist software unfortunately - perhaps a kind accountant will file for you for a reasonable fee?

billozz

thanks for the reply, we used Andica to do our partnership return last year but unfortunately the comuter we usedhad problems and got wiped so we cannot retrieve it