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The implications of the Budget 2015 tax changes for UK law firms

By Louis Baker, Head of Professional Practices, Crowe Clark Whitehill

13 July 2015

The UK government's last two Budgets have introduced a raft of new tax avoidance rules directly relevant to law firms and law firm partners. The March Budget included yet another attack on structuring arrangements which some firms have used in recent years. Meanwhile, in the July Budget, the Chancellor announced changes to the taxation of dividends, in part to negate the lowering of corporation tax rates when considering how to structure a firm.

So, what does this mean for law firms and their partners? Since 18 March 2015, the disposal (including liquidation) of a corporate partner of a partnership or limited liability partnership (LLP) has no longer had the benefit of Entrepreneurs' Relief for capital gains tax (CGT) purposes. That is, unless the company is conducting its own trade beyond simply being a member of a LLP.

Context of the anti-avoidance attack

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