Partnership income tax — salaries and interest as profit allocation

Two friends carry on a catering partnership. Their partnership agreement provides that, before profits are shared equally, one partner is to receive a 'salary' of £20,000 in recognition of the longer hours she works, and both partners are to receive interest of 5% on their fixed capital contributions of £40,000 each. In 2026/27 the partnership's trading profit is £120,000. A trainee solicitor is asked to explain the income tax treatment of the £20,000 'salary' paid to the partner.