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TonyTax
TonyTax, Tax Consultant
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Experience:  Inc Tax, CGT, Corp Tax, IHT, VAT.
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About to purchase a business that is currently trading (a small

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About to purchase a business that is currently trading (a small cafe).
I will be supplying the cash to pay for the business and all solicitor fees etc.
My partner will be running the business as I will carry on working in my current job.
I am looking at starting a 'partnership' instead of 'sole trader', so we can both be responsible for the business.
Am I allowed not to take a wage from the new business?
By not taking a wage, will my existing tax code alter? i.e will I have to pay more tax?
We are not married, just living together couple of joint bank accounts, couple of personal accounts each.
Submitted: 10 months ago.
Category: Tax
Expert:  TonyTax replied 10 months ago.
Hi. Take a look here for the HMRC view on allocating partnership, profits between partners. There is nothing to stop you allocating the profit in any way you wish so long as you don't vary it after the end of the accounting period. In practice, many people do look at their respective income situations post accounting period and allocate accordingly. It's not unusual to see more profit allocated to the partner who doesn't have another source of income. It used to to be the case that HMRC asked to see a partnership agreement on occasion but I haven't seen such a request that for many years. However, it would be a good idea to have one for the protection of you both. If you have no profit allocated to you, your tax code won't change. Even if you did, you could have any such adjustment taken out of your tax code since you will need to complete a self-assessment tax return in any event. I hope this helps but let me know if you have any further queries.
Customer: replied 10 months ago.
One question, what is a partnership agreement?
Is it drawn up through solicitors at point of purchase?
Or can I buy a pack from WHSmiths?
Expert:  TonyTax replied 10 months ago.
You can find one here. Google "partnership agreement template UK" for more examples. You can have a solicitor draw one up or design your own or use a template. I don't know whether WH Smith sell one.
TonyTax, Tax Consultant
Category: Tax
Satisfied Customers: 15753
Experience: Inc Tax, CGT, Corp Tax, IHT, VAT.
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