"Rachel Reeves is expected in the upcoming Autumn budget to introduce Employer national insurance contributions (NICs), at around 15% to members of limited liability partnerships (LLPs). This, in theory, would bring them in line with other tax structures and a fairer system as well as generating roughly £2 billion in additional revenue. LLP structures are used by a high number of doctors, lawyers, and accountants and have long operated under that model."
"At present, the LLP is 'tax transparent' and pays no corporation tax instead the individual members report their profit and shares and pay income tax and self-employed national insurance. The LLP structure also allows the members to benefit from limited liability protection, whilst also benefiting from the flexibility of an LLP compared to a limited company. What are the tax advantages of an LLP? LLPs come with various tax advantages that have made them attractive to certain high-earning professions such as lawyers, doctors, and accountants."
An Autumn budget proposal would require LLPs to pay employer national insurance contributions of about 15% on member earnings. The change would align LLPs with other business structures and is projected to raise roughly £2 billion. LLPs currently operate as tax-transparent entities where profits are allocated to members who pay income tax and self-employed national insurance, while retaining limited liability protection and greater operational flexibility than limited companies. Common advantages of LLPs include pass-through taxation, a single layer of taxation that avoids corporate dividend interactions, a minimum two-member requirement, and flexible profit allocation among members.
Read at London Business News | Londonlovesbusiness.com
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