Breaking news from the BBC Paper tax returns to be replaced by digital by 2020

Read more...

Chancellor George Osborne delivers his last budget before the General Election

Read more...

Tax planning for 5 April 2015

Read more...

CONSTRUCTION INDUSTRY SCHEME (CIS) 11/08/2011

Read more...

09/06/11 The review of money laundering rules may benefit smaller companies.

Read more...

VAT Loophole closed 14/11/11

Read more...

Contact Us

News Items

Tax Tips

Great with People
Brilliant with Numbers
Clear and Precise with Words
 


Call us now on 023 8083 6900 ABDS Home

Tax Tip

New LLP Tax rules are announced.

New LLP Tax rules are announced.

HMRC has published final guidelines for the legislation intended to stop partners pretending that they are self employed to avoid tax. Some avoidance schemes that were closed down in recent years involved misuse of partnership rules, HMRC has said.

But new rules are still likely to create financial and administrative challenges for LLPs. A partner will be considered an employee for tax purposes if all three of the following conditions are met:

  • 80% or more of their pay is guaranteed
  • the partner does not have “significant influence” over the affairs of the partnership 
  • the partner pays less than 25% of their “fixed pay” to the partnership profit pool

Stuart Coleman, Manager of the Tax Department of ABDS comments:
“This is going to hit new or junior partners because they usually have most of their income guaranteed rather than from a share of their firm's profit. Partnerships’ tax bills are likely to rise.”

Firms that have to pay employers’ national insurance of 13.8% on partners, could pay an additional £13,800 in tax for each junior partner with an income of £100,000.

Cash flows may also be squeezed as the employed have to pay tax monthly rather than twice yearly for the self employed.

For those who are looking for a more personal approach on a range of issues, including partnership tax planning contact us at ABDS.

ABDS Chartered Certified Accountants of Southampton.
Tel: 023 8083 6900  E-mail: abds@netaccountants.net

Great with People  Brilliant with Numbers Clear and Precise with Words

« Back to Tax Tips