Lords call for partnership tax rule delay
The government should consider delaying new tax rules for limited liability partnerships, due to start in April, to allow more time to improve the legislation, a House of Lords committee has recommended.
New rules to stop partners pretending that they are self-employed to avoid tax are so different from the original proposals consulted on last summer that more time is needed to get it right, the peers said in a report.
Under new rules, partners would need to pass at least one of three tax tests to carry on being taxed as self-employed:
- 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
The rules will mainly affect junior partners because they usually have most of...