Updated partnership guidance
Revised guidance on the deemed employment position for members in LLPs was issued on Friday of last week.
The outcome still appears to be that members of LLPs will have to comply with one of three tests or be treated as employees, it had been hoped that the widespread concern expressed over the new provisions and the fact that they will be in force before the Finance Act is available could persuade the government on a mitigation or at least a delay in implementation. The latest guidance indicates that, despite disquiet, the new regime is likely to take effect from 6 April 2014.
Under the draft proposals, members of LLPs must satisfy one of three tests in order to maintain self-employed status: -
- at least a quarter of their expected remuneration is profit-dependent;
- their capital contribution is at least 25% of their ‘fixed pay'; or
- they can demonstrate that they have significant influence on the overall partnership.
If partners are deemed to be employees, then for the LLP employer's national insurance contributions at 13.8% will be due while the individual will have a cessation of self-employment and subsequently fall under PAYE with the attendant provisions on benefits in kind, etc. This could put a big strain business and personal cash-flows.
Date: 25th February, 2014
Articles from this Author
1st November, 2018
Budget 2018 - Changes for businesses
22nd October, 2018
Making the most out of your home? Rent a room relief
3rd May, 2018
Tax changes for non-resident corporate landlords
4th April, 2018
EMI options - a current risk
Contact Business Service Partners
Choose from the drop down menu below to select a Partner to contact.
Season’s Greetings and Happy New Year from everyone at Mercer & Hole pic.twitter.com/x4o1o9tbWP
For the latest Mercer & Hole news, visit our LinkedIn page mercer-&-hole