Practical effects of becoming a salaried member

Earlier this year, Gateley reported on the government’s proposed changes to the tax treatment of certain members of limited liability partnership (LLPs). Despite strong protests from bodies such as the Law Society and the Institute of Chartered Accountants in England and Wales, the government has refused to back down and the changes will be implemented next month.

The changes mean that, with effect from 6 April 2014, an individual who provides services to an LLP will be taxed as an employee (rather than on a self-employed basis) if: 80 per cent or more of the member’s remuneration is fixed or not dependent on the overall profits and losses of the LLP; the member has no significant influence over the LLP’s affairs; and the member’s capital contribution is less than 25 per cent of their remuneration.

But what are the practical effects of these changes for the member and the LLP? …

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