Salaried Member LLP Tax Calculator

An LLP member is treated as a 'salaried member' (i.e., an employee for tax purposes) if they meet all three conditions in ITTOIA 2005 s863A-G: (A) >80% of remuneration is fixed/disguised salary, (B) no significant influence over LLP affairs, and (C) capital contribution is less than 25% of the disguised salary.

If all three conditions are met, the member is treated as an employee for income tax and NIC purposes. The LLP becomes the employer and must deduct PAYE and pay employer's NIC (13.8%).

Disguised salary is any remuneration that is fixed (not variable with LLP profits). This includes fixed monthly drawings, minimum profit shares, guaranteed bonuses, and benefits with a fixed value.

The member must have contributed at least 25% of their 'disguised salary' as capital to the LLP. This capital must be at genuine risk of loss. Loans from the LLP used to fund the capital don't count.

Yes — by failing at least one condition. For example, increasing variable profit-sharing to below 80% fixed, contributing sufficient capital, or demonstrating significant influence (e.g., seat on management committee with genuine decision-making power).

The salaried member rules took effect from 6 April 2014. They targeted law firms, accountancy practices, and financial services firms that used LLP membership to avoid employment taxes.

Yes — many traditional law and accountancy partners were reclassified as salaried members in 2014, significantly increasing their tax costs. Firms had to restructure profit allocation to maintain self-employment status.

Yes — as a salaried member, both employee Class 1 NIC (8% / 2%) and employer Class 1 NIC (13.8%) apply. As a genuine self-employed partner, only Class 4 NIC (6% / 2%) applies — a significant difference.