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HMRC internal manual

Employment Status Manual

HM Revenue & Customs
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Salaried Members: Capacity

ITTOIA/S863B(3) - Step 1

The Salaried Member legislation only applies to the rewards received by the individual from the LLP for services as a member.

The legislation does not apply to any reward that an individual member obtains for work performed for the LLP in a separate capacity, for example as part of a separate business. This is because this income does not come from being a member of the LLP or from rights under the LLP agreement. This comes from other business dealings between the LLP and that individual and should be taxed separately based on the nature of the arrangements.

The Salaried Member legislation is applied to earnings from that LLP. If someone is a member of a number of LLPs, then these are looked at separately.

Example 1

This example illustrates how a member can carry out work for the LLP in a different capacity which is not relevant to the Salaried Member legislation.


The B LLP is formed between the B family and a local developer to develop a plot of land. Kate B is a member of the B LLP, but under the LLP agreement, she does not need to work for the B LLP.

Kate B is an architect and engaged by B LLP to draw up plans in her capacity as an architect, for which she is paid an arm’s length fee under a separate contract.

In this case, Condition A is not affected by the remuneration which Kate B receives from the LLP in respect of drawing up the plans. Whilst Kate B is a member who performs services for the LLP, she does not perform those services as a member of the LLP. The B LLP has contracted for her to provide services as part of her profession as an architect and her reward from the LLP all arises to her in that capacity. From the point of view of B LLP, paying Kate B is no different to paying any other party that has provided services to the B LLP.


Example 2

The following example looks at another common situation, where a member is receiving rent from the LLP.

S owns a farm which he lets to a farming LLP, SSS LLP, of which he is a member. This rent is a commercial sum.

Apart from his share of the profit from the farming business, S receives a rent from the LLP. The rent is not taken into account for the purposes of Condition A (and nor, if S were a Salaried Member for other reasons, would it form part of his earnings).