Under the current tax rules, all members of an LLP are automatically treated as self-employed for tax purposes, including those who only take substantially \u2018fixed salary\u2019.\u00a0 This means that they pay tax on their LLP profit share through the self-assessment system and do not suffer tax\/NIC under PAYE. Similarly, the 13.8% employers\u2019 NIC cost is avoided.<\/p>\n
HMRC now consider that this treatment has been far too generous since, in substance, the status of many fixed salaried partners is more akin to acting as an employee.\u00a0 Thus, from 6 April 2014, specific new legislation will apply to treat the majority of \u2018salaried\u2019 partners as having an \u2018employee\u2019 status for tax purposes.<\/p>\n
These rules apply to any LLP partner where all<\/strong><\/em> the following three conditions are satisfied:<\/p>\n Where partners fall within the \u2018disguised salary\u2019 rules for LLPs, their earnings will be subject to PAYE and employees\u2019\/employer\u2019s NICs.\u00a0 Furthermore, they will also be within the ambit of the employment-related securities and disguised remuneration legislation.<\/p>\n Partners in an ordinary partnership (as opposed to an LLP) are not caught by the \u2018disguised salary\u2019 regime. The question of whether they are acting as genuine partners or working as employees will still be decided on the precise facts of each case.<\/p>\n Peter Rayney Under the current tax rules, all members of an LLP are automatically treated as self-employed for tax purposes, including those who only take substantially \u2018fixed salary\u2019.\u00a0 This means that they pay tax on their LLP profit share through the self-assessment … Continue reading \n
\n11 February 2014<\/p>\n","protected":false},"excerpt":{"rendered":"