Limited partnerships are partnerships in which the liability of
at least one of the partners for the debts and obligations of the
firm is restricted to a set amount. They are described in BIM72101
and the Limited Partnerships Act in reproduced at BIM72510 -
BIM72515. A limited partnership may consist of individuals or
companies or a mixture of both. A limited partnership is required
by law to have at least one partner with unlimited liability, known
as a general partner, but the general partner is often itself a
limited liability company.
ICTA88/S118 restricts the amount of relief against other
income available to limited partners for losses, capital allowances
and interest received or paid in connection with a trade carried on
by a limited partnership. The legislation restricts 'sideways'
relief for these items to the amount of capital which the limited
partner has contributed to the partnership. Any excess may only be
relieved against profits of the partnership trade. Detailed
instructions and examples are at BIM72105.
With effect from 6 April 2001 the Limited Liability Partnership
Act 2000 introduced a new corporate business entity to Great
Britain - the Limited Liability Partnership (LLP).
LLPs are, in commercial law, regarded as bodies corporate
with legal personality separate from their members and will be
subject to aspects of company law. The liability of a member to the
LLPs debts is generally restricted to the amount of capital they
have contributed to the LLP.
Although in general law it is a body corporate you should
normally tax the LLP and its members as though it were an ordinary
partnership and the members of an LLP were partners in such a
partnership. Detailed guidance is at BIM72110 - BIM72155. The
guidance relating to the restriction of relief for losses and
interest for members of an LLP that carries on a trade is at
BIM72135.
The normal tax exemptions relating to income received by a
pension fund, the pension business of life insurance companies and
the tax exempt business of friendly societies in their capacity as
a member of an LLP, that carries on a property investment business,
is disapplied (see BIM72155).
