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HMRC internal manual

Employment Status Manual

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HM Revenue & Customs
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Limited Liability Partnerships: Salaried members

ITTOIA/S863A

This guidance looks at the legislation that treats some members of LLPs as Salaried Members. This legislation applies from 6 April 2014.

This guidance applies to:

The “Salaried Member” rules apply only to LLPs formed under United Kingdom legislation (the LLP Act 2000).

This guidance does not apply to:

These rules do not apply to general partnerships or limited partnerships that are formed under Partnership Act 1890 and Limited Partnerships Act 1907 respectively.

In addition, they do not apply to entities outside the UK that have structures broadly equivalent to a UK LLP.

Policy intention:

The Salaried Member provisions are intended to apply to those members of LLPs who are more like employees than partners in a traditional partnership.

The Salaried Member legislation takes a similar approach to the wide-ranging tests that would be applied in determining whether a particular person was a partner in a traditional partnership, but the Salaried Member legislation provides a more certain outcome.

Examples:

This guidance contains a number of examples.

It is important that you do not try and decide a case on the basis that it seems closer to this example than that.

These examples are intended to clarify the guidance and show how the legislation applies to real scenarios. For this reason wherever possible they are based on examples submitted to HMRC by firms and their agents.

Many of these examples are quite specific and, while they show HMRC’s general view of the legislation, they are relevant to relatively limited situations.

It is important not to try and reason “by analogy” or to use these examples in other contexts, or on different facts, where this goes against the general scheme of the Salaried Member legislation and its underlying policy rationale.

Contents:

At ESM60005 there is an overview of the legislation which includes links to the relevant guidance.

For those that prefer there is a table of contents at ESM60010.