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...