ARTICLE · 30 MAY 2013

Exploitation Of Partnership Tax Rules

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The Government is consulting on how to change two aspects of the partnership tax rules in order to prevent tax loss arising from disguised employment relationships through limited liability partnerships and from certain arrangements involving the allocation of profits and losses among partnership members.

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As announced at Budget 2013, the Government is consulting on how to change two aspects of the partnership tax rules in order to prevent tax loss arising from disguised employment relationships through limited liability partnerships (LLPs) and from certain arrangements involving the allocation of profits and losses among partnership (not just LLP) members.

Consultation on the proposals will run until 9 August 2013 and the new rules will apply from 6 April 2014.

Salaried members of LLPs

Under current tax rules, individual members of LLPs are taxed as self-employed partners and corporate members are liable to corporate tax according to their respective profit shares (if UK resident).

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