How Do I Register as a Partner in a Partnership?

The way partners in a partnership tell HMRC about their connection to the business is different to the way partnerships must register as an entity. In this post we’ll go over who can be a partner, and how to sign up. You can also find more guides and templates for partnerships in our resource centre.

Why do I need to register as a partner if the partnership has already been set up?

Partnerships don’t pay tax as an entity but they do need to submit tax returns. Connecting your tax records to the partnership like this helps HMRC make sure you pay the right amount of tax on your share of the partnership’s profits.

Who can be a partner?

The partners in a business partnership can be individuals, or even entities such as another partnership or a limited company. Unlike limited companies which need at least one individual person to be a company director, a partnership can consist entirely of partners which are corporate entities.

What information will I need when I register as a partner?

The details you need to supply during the registration process depend on whether you’re joining the partnership as an individual or through an entity (such as a limited company or another partnership). In both cases you’ll need to confirm things like:

• Your personal details
• Your business or company name, and its address
• Your Unique Taxpayer Reference (UTR) number
• The partnership’s UTR number

Registering as an individual partner using an SA401 form

Each individual partner will need to complete an SA401 form to register as a partner for Self Assessment. If you’re already registered for Self Assessment then you’ll use the same UTR number that you normally do. This helps connect your tax records together more smoothly. Just remember that it will be different to the UTR for the partnership. Don’t mix them up!

Registering another entity as a partner using an SA402 form

Partners which are an entity, such as another partnership or a company, must complete an SA402 form to register as a partner in a partnership.

One person within the organisation will act as a point of contact for the entity’s role as a partner. For example, a partnership will have a nominated partner, and this person takes responsibility for completing and submitting information to HMRC on time. It’s their duty to register their partnership as a partner in another partnership.

Remember to include the registration number if the new partner is a Limited Liability Partnership or limited company.

Appointing an agent

You’ll need to authorise anyone acting as an agent on your behalf before HMRC can deal with them in relation to your role as a partner, even if you’ve already given authorisation for other areas.

This authorisation only deals with an agent acting for you. If the partnership also has as an agent, you’ll need to authorise this separately.

How do I pay tax if I’m in a partnership?

The partnership doesn’t actually pay tax as an entity, but the nominated partner will complete and submit a Self Assessment tax return for the business. Each partner will need this information so they can refer to it on their own tax return.

The type of tax return you send depends on your business structure, but essentially the income figures you put down will be your share of the partnership’s profits. For example:

• An individual partner will submit a Self Assessment tax return and pay Income Tax
• A partner that is a limited company will record its share of the partnership’s profits on the Company Tax Return and pay Corporation Tax on it

Should I sign a partnership agreement?

Having a partnership agreement isn’t a legal requirement, but they can be very useful. This legal document will normally cover things like:

• Each partner’s responsibilities, so everyone understands their role and duties
• The amount of capital raised by each partner and their entitlement to a share of any profits
• What happens if a partner leaves or if someone in the business dies

For instance, some partnerships might have a ‘sleeping partner’ who contributes capital (and takes a share of the profits as a result) but doesn’t share the daily management.

What am I responsible for as a partner?

Unlike a limited company which is separate to its owners, and even though partnerships must register as an entity for tax returns, a partnership isn’t legally distinct from its partners.

This means each partner, including ‘sleeping’ partners, share equal responsibility for the partnership and any debts or liabilities. Although the nominated partner is responsible for submitting the partnership’s tax return, every partner has a duty to support this, and will be responsible for any penalties the partnership receives.

Learn more about our online accounting services for partnerships and partners. Call 020 3355 4047 to chat to the team, and get an instant online quote.