From 6 April 2014, the rules governing the taxation of partnerships will change significantly and could affect a large number of people working under such arrangements.
The two main areas of focus are:
Limited Liability Partnerships
From 6 April 2014, the automatic presumption of self-employment will be removed for partners of LLPs. The salaried member legislation is being amended so that those members who are effectively in the same position as employees will be taxed as employees. Partners will have to satisfy certain criteria to continue to be treated as self-employed partners for tax and national purposes.
The second strand of the new legislation focuses on partnerships with corporate members and is targeted to prevent tax motivated allocation of partnership profits and losses. Legislation will include provisions to allow excess profits to be reallocated from a non-individual partner to an individual partner and also deny certain income tax loss reliefs and capital gains for a loss allocated to an individual partner.
We are currently reviewing the possible effect of these new rules on all of our partnership clients. If you would like further information, please contact Helen Sewell on 01527 558539 or email [email protected].