Posted in Latest News on 28 Feb 2014
Legislation is coming in from 6 April 2014 which will have a radical impact on the taxation of partners who are members of LLPs.
To date all members of LLPs have been treated as self-employed with favourable national insurance and tax payment dates. However, from 6 April 2014 many will be treated as employees and subject to income tax and national insurance contributions under monthly PAYE instead. Worse, firms will have to pay employers’ national insurance at 13.8% on these earnings, a steep increase in their costs.
To continue to qualify as self-employed, members will need to show that at least 20% of their profit share varies in relation to the overall profits of the firm, or have a significant role in the firm’s management, or introduce capital into the business of at least 25% of their profit share.
The last of these is likely to be the most popular option and, while members will have up to three months after 6 April to arrange for the introduction of capital to their firm, it is essential that they and their firms take action as soon as possible.
If you would like to know more please contact Mike Hodges over at our friends Saffery Champness.
Saffery Champness is one of the UK's Top 20 accountancy practices with a network of nine offices in the UK plus offices in Guernsey, Geneva and Zurich.