How do we pay ourselves in a partnership?

[photolady]

Hello,

My husband and I are in a partnership (about 8k profit in 2013) and are wondering how we should go about paying ourselves. We've been in business just over a year and have been drawing the money as we need it thus far. Obviously, we know that we will owe income tax/nat ins etc. at the end of the year and have taken that into consideration. However, we're suddenly wondering (panicking) if we should be paying ourselves in a different way. Any advice much appreciated!

Thanks!

 

[kevin.doran]

On the presumption that you're a standard partnership and not an LLP...

What you're doing is absolutely fine. A partnership is really just the same as being self-employed in that 'you are the business' so for that reason the funds are yours to draw as and when you wish.

The partnership itself is not taxed, instead each partner's share of the profits will form part of their income when completing their own year-end Self Assessment Tax Return and will be taxed accordingly. i.e. if the £8k was split 50/50 you'd declare £4k each on your personal Tax Returns which would be then added onto any other income you had for the year when working out your overall tax position.

 

[photolady]

Fantastic, yes we're standard partners! Thanks for your help!

 

[dafcjim]

Sorry to gate crash...but I have a few questions.

1, if the amount is split 4k..would this mean profit is under the National insurance 4 limit..less then 5.8k... or is that based on the partnerships total? So the 8k?.

With , is this 29% to be deducted if over 7.9k? (20% income tax, 9% ni4 and ni2 contributions?).

 

[Scalloway]

What each partner pays tax on is based on their share of profit, plus any other taxable income they may have.