A UK trading partnership does not pay tax itself — instead, each partner pays income tax and Class 4 National Insurance on their allocated share of the partnership's profits. This calculator helps you work out each partner's individual tax liability for 2025/26, taking into account their profit share, any other income, and pension contributions.
2025/26 Partnership Tax Key Rates
- Personal Allowance: £12,570
- Basic rate (20%): £12,571 – £50,270
- Higher rate (40%): £50,271 – £125,140
- Additional rate (45%): above £125,140
- Class 4 NI: 6% on profits £12,570–£50,270; 2% above
- Class 2 NI: Abolished from April 2024
Partnership Tax Calculator
Partner 1
Partner 2
How Partnership Tax Works in the UK
A trading partnership is transparent for tax purposes, meaning the partnership itself does not pay income tax or Capital Gains Tax. Each partner is taxed as an individual on their allocated share of the partnership profits. The partnership files a partnership return (SA800) to report the total income and how it is split, but each partner is then responsible for reporting their share on their own Self Assessment return and paying their individual tax liability.
Partners are treated as self-employed for National Insurance purposes. They pay Class 4 NI on their profit share above the Lower Profits Limit. Class 2 NI was abolished from April 2024, so partners no longer pay the flat weekly rate separately.
Profit Sharing Arrangements
Partnerships can share profits in whatever ratio partners agree. The most common arrangements are equal shares, fixed salary allocations followed by a profit split, or profit shares based on capital contributed. The profit-sharing ratio must be documented in the partnership agreement. HMRC requires each partner to report their share accurately. Where profit shares change during the year, a careful apportionment may be needed.
For this calculator, enter each partner's share as a percentage of total profit. All shares should add up to 100%. If your partnership uses a fixed salary allocation first, convert the effective share to a percentage of the total profit before entering it.
Income Tax for Partners
Each partner applies their personal allowance (£12,570 in 2025/26) against their total income, which includes the partnership profit share plus any other income. Pension contributions reduce adjusted net income. Income above the personal allowance is taxed at 20% (basic rate) up to £50,270, then 40% (higher rate) up to £125,140, and 45% (additional rate) above that. Where adjusted net income exceeds £100,000, the personal allowance is tapered by £1 for every £2 of excess, effectively creating a 60% marginal rate in the £100,000–£125,140 band.
Class 4 National Insurance for Partners
Class 4 NI applies to partnership profits, not to the partner's total income. The calculation uses the same thresholds as for sole traders: 6% on profits between £12,570 and £50,270, and 2% above £50,270. Class 4 NI is reported and paid through Self Assessment alongside income tax. Payments on account apply in the same way as for any self-employed individual.
Partners who also have employment income may be able to defer Class 4 NI if their employee National Insurance contributions plus Class 4 would exceed the annual maximum contribution. This requires a formal deferment application to HMRC.
Payments on Account
Partners, like all self-employed individuals, are usually required to make payments on account toward their next year's tax bill. Each payment is 50% of the prior year's Self Assessment liability (income tax plus Class 4 NI combined). The first payment is due by 31 January and the second by 31 July. A balancing payment or refund is settled with the following January payment.
New partners joining a firm should take care to budget for the first year's tax liability, which will often arrive as a larger combined payment alongside the first payment on account.
Frequently Asked Questions
Partnership profit is allocated according to the profit-sharing ratio set out in the partnership agreement. Each partner's share is then treated as their self-employment income for tax and National Insurance purposes.
Yes. Partners pay income tax through Self Assessment on their share of partnership profits, not via PAYE. Each partner is taxed as a self-employed individual applying standard income tax bands and their own personal allowance.
In 2025/26, partners pay Class 4 NI at 6% on profits between £12,570 and £50,270, and 2% on profits above £50,270. Class 2 NI was abolished from April 2024.
Yes. Each partner has their own personal allowance of £12,570 for 2025/26, applied to their total income including their partnership profit share and any other income.
Yes. Gross personal pension contributions reduce a partner's adjusted net income for income tax purposes, potentially keeping them below higher-rate bands or preserving the personal allowance where income is near £100,000.
Yes. Each partner must register for Self Assessment and file their own tax return. The partnership itself also submits an SA800 partnership return showing how profits are allocated, but does not pay tax directly.
Unequal profit shares are common. The calculator allows any percentage split. Where one partner takes a higher share, they will typically have a greater income tax and Class 4 NI liability.
No. The £1,000 trading income allowance is not available to partners in a partnership. It applies only to sole traders and individuals with certain miscellaneous income.
Partnership losses allocated to a partner can be set against other income in the same tax year, carried back one year, or carried forward against future partnership profits, subject to HMRC loss relief rules and any at-risk restrictions.
From 2024/25, all self-employed individuals and partners are taxed on profits arising in the tax year (6 April to 5 April) rather than on their accounting year basis. This removed overlap relief going forward. Partners with non-April year ends may need to apportion profits.
Yes, in most cases. Members of a Limited Liability Partnership (LLP) are generally taxed in the same way as partners in a conventional partnership, provided the LLP is trading and the salaried member rules do not apply to reclassify their income as employment income.
The partnership files an SA800 partnership return showing total income and allocations. Each partner reports their share on their personal SA100 return. The partnership pays no tax itself.