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HMRC internal manual

Employment Status Manual

HM Revenue & Customs
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Salaried Members: Implementation Matters: Capital assets

Where, after applying the tests in sections 863A and 863B, an individual is treated as a Salaried Member, the legislation applies to treat all amounts received by that individual as employment income subject to the applicable income tax rules under ITEPA. Class 1 and 2 NICs may also apply.

A Salaried Member is subject to the same rules on taxable benefits received as any other employee.

This treatment does not include any amounts received by a Salaried Member in respect of capital assets of the LLP that would not be taxable as employment income if received by an employee. Examples include dividends from shares held by the firm.

The interest received by a Salaried Member when becoming a member of the LLP is not itself considered to be a benefit for income tax purposes.