"The head of one of Britain's best-known law firms has warned that Rachel Reeves's reported plan to raise taxes on limited liability partnerships (LLPs) could drive professionals and entrepreneurs out of the UK, undermining London's status as a global business hub. James Libson, managing partner of Mishcon de Reya, said proposals to align LLP taxation more closely with standard employment rules risked punishing professionals who take on business risk and contribute significantly to the economy."
"However, Libson described the potential changes as "dangerous and potentially destructive", warning that they would worsen Britain's brain drain just as rival financial and legal centres were growing more competitive. "To equate partners and investors who operate through LLP structures as employees is to sell the proposition in completely the wrong way," he said. "The reason the system works is because these are people investing in their business - they take risk, they put in capital.""
Proposals under consideration would align LLP taxation with standard employment rules and employer National Insurance, potentially raising up to £1.9 billion. The managing partner of Mishcon de Reya warned that treating LLP partners as employees would punish professionals who invest capital and take business risk, reducing the UK's appeal for middle and upper middle-income workers. The changes could deepen Britain's brain drain as rival financial and legal centres grow more competitive. The Treasury has not confirmed details, and sources say any increases may be less severe and could include exemptions for lower-earning partners.
Read at Business Matters
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