Taxes Consolidation Act 1997 section 1013

Limited partnerships

Section 1013 restricts the right of limited partners (including passive partners) to set off losses, interest and capital allowances from a partnership trade against other income, limiting relief to the amount of their contribution to the trade and, in most cases, confining that relief to income from the partnership trade itself.

• A "limited partner" is broadly defined to include not only partners in registered limited partnerships but also passive general partners (those not working for the greater part of their time on the day-to-day management of the trade), partners with limited liability under foreign law, and partners in foreign-registered partnerships who are not active.
• The total relief available to a limited partner for losses, interest paid and capital allowances (the "aggregate amount") cannot exceed the partner's contribution to the trade at the end of the relevant tax year or accounting period, and relief is generally confined to income from that partnership trade only.
• A partner's contribution is calculated as capital invested and undrawn profits, reduced by any amounts received back directly or indirectly, including sale proceeds for a partnership interest, loan repayments by the partnership, or amounts received for assigning partnership debts.
• Transitional provisions exempt certain specified individuals (passive general partners only) from the restrictions where the partnership trade involves renewable energy leasing, White Fish Fleet vessels, or premises qualifying for double rent allowances, subject to various cut-off dates.