Let's suppose you had a mortgage of £200,000, paid mortgage interest of £1000 per month and were a 40% taxpayer. Not since the days long ago of MIRAS could you get tax relief on your home mortgage but if you could get tax relief at your marginal tax rate, the cost of your mortgage interest payment would drop to £600. Alternatively have a larger house for the same monthly outlay - the choice is yours!

In simple terms here's how a partner in a partnership could look to do it...

1. As a partner they need a capital account in the partnership accounts, for convenience let's say that's also £200,000.
   
   
2. The partner needs to withdraw the WHOLE of their capital account £200,000 from their partnership and use that money to pay off their home mortgage.
   
3. The partner then takes out a new loan secured on their house for the purposes of contributing the funds to their capital account with the partnership.

So everything has gone full circle, the partner still has a £200,000 loan and capital account but now the loan is for a purpose that provides for tax relief on the loan interest.

This is a simplified example and there are variations on it. It's worth noting that it is often recommended that there is a time delay between the repaying of one loan and taking of another and if possible from a different bank. Under no circumstances should this be attempted without proper professional advice.

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