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HMRC internal manual

Employment Status Manual

Salaried Member: Disguised Salary: Benefits in kind and pension contributions


A reward package may include entitlement to monetary amounts and to non-monetary benefits. However, in determining whether there is Disguised Salary, the focus falls exclusively on amounts ‘payable’ in respect of the individual’s services.

Many LLPs provide “benefits” to members, which would be taxable as benefits in kind, if the member were an employee. These “benefits” are not taken into account for the purposes of Condition A.

Although they are not taken into account in determining whether the condition is met, they will be taxable as benefits if the individual is a Salaried Member.

If LLP members are auto-enrolled into pension schemes, into which the LLP will make contributions on behalf of the members, then these contributions are not taken into account for the purposes of Condition A.


*Example *

The following is an example of benefits in kind.


P is a member of a large LLP. The LLP provides benefits to members, such as private health insurance and use of a car.


The value of “benefits-in-kind” received by P (i.e. the insurance and car) is not taken into account in deciding whether or not Condition A is satisfied. However, these benefits are taxable on P under the employment income rules if P is a Salaried Member.