Income Tax (Trading and Other Income) Act 2005 section 94AA

Deductions in relation to salaried members

Section 94AA allows a limited liability partnership to claim a tax deduction for expenses it pays in connection with a member who is treated as an employee under the salaried member rules.

• Where a member of an LLP is classified as a "salaried member" and treated as an employee for tax purposes, the LLP may claim a deduction for employment-related expenses it pays on behalf of that member
• The deduction is only available where no other deduction would otherwise be permitted for the same payment when calculating the LLP's trading profits
• The deduction is subject to the normal restrictions on trading deductions, including the prohibition on capital expenditure, the requirement that expenses be wholly and exclusively for trade purposes, restrictions on business entertainment and gifts, and rules on social security contributions
• The provision also applies to LLPs carrying on property businesses, not just trading activities

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