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Change of status: Manage newly-classified LLP salaried members

Louis Baker and Susan Ball consider the practical steps to take if an LLP member will be classed by HMRC as a salaried member from 6 April 2014 

20 March 2014

In December 2013, the UK
government announced its ‘salaried member’ tax legislation for limited liability partnerships (LLPs) and it has been the talk of the town ever since.

The government proposes that
some members of LLPs will be classed, for tax purposes, as ‘salaried members’ and as if they are employees. This means that firms will be liable for employers’ national insurance contributions
(NIC) on the profit shares of their
salaried members. The legislation does not apply to general partnerships under the Partnerships Act 1890 or overseas LLPs.

The three conditions

As a reminder, the definition of a salaried member is based on three tests. In the context of this legislation, it is failure
that is ‘good’ – a member only needs
to fail one te...

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