Changes for Limited Liability Partnerships (LLPs)
Since their introduction in 2000, LLPs have become increasingly popular as a vehicle for carrying on a wide variety of businesses. The LLP is a unique entity as it combines limited liability for its members with the tax treatment of a traditional partnership. Individual members are deemed to be self-employed and are taxed as such on their respective profit shares.
The government now considers that deemed self-employed status is not appropriate in some cases. For example, individuals who would normally be regarded as employees in high-salaried professional areas such as the legal and financial services sectors are benefitting from self-employed status for tax purposes which leads to a loss of employment taxes payable.
The new rules will apply when an individual is a member of an LLP and three conditions are met. The conditions are:
The new rules will have effect from 6 April 2014.
Internet link: Partnerships
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