Lords call for partnership tax rule delay

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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...

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12th Mar 2014 19:20

Tests are the wrong way round

I think the tests are the wrong way round. For example, presumably less than 80% of pay should be guaranteed to be self employed. Also, I believe the member needs a capital account equivalent to at least 25% of their fixed salary rather than pays 25% of their fixed salary which would indicate an annually increasing amount.



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