Income Tax (Trading and Other Income) Act 2005 section 863A

Limited liability partnerships: salaried members

Section 863A determines when an individual member of a limited liability partnership must be treated as an employee of that partnership for income tax purposes, rather than as a self-employed partner.

• Where three specified conditions (A, B and C) are all met, an LLP member is reclassified as an employee for income tax purposes
• The affected member is treated as working under a contract of service with the LLP, rather than being a partner
• All of the member's partnership rights and duties are recharacterised as employment rights and duties under that deemed contract of service
• Anti-avoidance rules apply to prevent arrangements designed to circumvent the salaried member provisions