London: +44 (0)20 7236 2601
St Albans: +44 (0)1727 869141
Rickmansworth: +44 (0) 1923 771010
Milton Keynes: +44 (0)1908 605552

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
Author: Cathy Corns


Articles from this Author

20th March, 2018
Beneficial loans

20th March, 2018
IR35 consultation

20th March, 2018
Tax codes

25th October, 2017
R&D changes see 22% increase in claims by SMEs

Contact Business Service Partners

Choose from the drop down menu below to select a Partner to contact.


Disruption in distribution click on the link to read how Corporate Advisory Partner, Henry……

Vendor assistance and vendor due diligence click on the link to read Corporate Finance Dire……



For the latest Mercer & Hole news, visit our LinkedIn page mercer-&-hole

Click here to follow us on LinkedIn