This site uses cookies. By continuing to browse the site you are agreeing to our use of cookies. To find out more about cookies on this website and how to delete cookies, see our privacy notice.

Decisions, decisions! Partnership or limited company?

Shared from Tax Insider: Decisions, decisions! Partnership or limited company?
By Chris Thorpe, July 2024

Chris Thorpe looks at partnerships and companies and considers which business model might be best. 

A sole trader looking to expand their business might be weighing up the ‘pros’ and ‘cons’ of a partnership or a limited company. They are very different, with not only very different tax consequences, but functions as well. 


A partnership is essentially two or more sole traders coming together for a common venture. It is governed by the Partnership Act 1890, with the tax rules mostly contained within a Statement of Practice (SP D12, dated January 1975).  

Partnerships are transparent; they do not have their own legal identity, so the individual partners are subject to income tax on their own profit shares (irrespective of drawings, and with Class 4 National Insurance Contributions) and shares of capital profits or losses for.

This is one of our 2599 Premium articles

To see this article in full and unlock access to our complete library of 2599 articles click 'subscribe & unlock' below:

Subscriptions include a 14 day free trial
+ money back satisfaction guarantee