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Streamlining partnership: The wider impact of the UK LLP tax changes

The controversial UK LLP tax changes have had the added benefit of removing the distinction between equity and non-equity partners, says Fergus Payne  

23 May 2014

Lawyers enjoy a challenge. Once they got their heads around the concept that failing a test was a good thing, LLPs set about taking to steps to ensure that none of their partners would be treated as salaried members under the much-heralded changes to partnership tax rules in the UK. Following publication in early December 2013 of draft legislation and HMRC guidance, there was intense activity by many law firms to meet the deadline of 5 April 2014.

Although yet to be enacted as legislation (Royal Assent is not expected until early July), the new salaried member rules are now well documented and firms have had to assume that they are operative with effect from 6 April 2014. Under the new rules, an individual LLP member will be a salaried member and treated as an employee for tax purposes if the following three...

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