Chancellor reportedly set to target LLPs
Law firm partners could be hit with a new tax under plans reportedly being considered by the government.
Chancellor Rachel Reeves is said to be preparing a £2 billion “tax raid” on lawyers, doctors and accountants who operate through limited liability partnerships (LLPs), as she looks to plug a £30 billion hole in the public finances.
The potential move, first reported by The Times (£), would impose a new charge on people who use LLPs — a business structure common among major law and accountancy firms. LLPs allow members to share profits while enjoying limited personal liability, but partners are treated as self-employed and are not subject to employer’s national insurance contributions, currently 15%. The new charge would reportedly be designed to mirror this, effectively bringing partners more in line with employees for national insurance purposes.
More than 190,000 workers use partnerships in the UK, with lawyers making up a significant share. The Centre for the Analysis of Taxation (CenTax) found that solicitors receive a fifth of all partnership income, averaging more than £300,000 each in profits annually.
Reeves is said to consider the current system “unfair” and is expected to “equalise the tax treatment” of partners and employees. The proposed charge would reportedly be set slightly below the employer’s rate of national insurance.
Economists estimate that a solicitor in a partnership earning the average £316,000 would face an additional charge of around £23,000 — roughly equivalent to a 7.3% tax rate. But many partners could be hit far harder, with The Legal Cheek Firms Most List 2026 showing that some top earners take home profits well into the millions.
Law firm partners aren’t the only ones who could be affected. Family doctors earn an average of £118,000 a year through partnerships, while accountants average £246,000.
The proposals form part of what’s been described as a broader effort to ensure “those with the broadest shoulders” pay their “fair share of tax”, alongside other expected measures such as a potential “mansion tax” on the sale of high-value homes.
Tax wealth, not income. Stupid idea RR.
Other than annual property taxes, because properties don’t move, wealth tax hasn’t worked to bring in meaningful income in any developed economy. I wish that was not the case, but it is.
This will, of course, spillover to lower salaries for associates.
Why does labour love to tax hardworking people?
Biglaw associates already don’t get paid that much on an hourly basis.
We should all just go on benefits.
Maybe Ines was right to quit while ahead.
Oh Jeremy Corbyn
Why is it right that law firm partners pay less NI/tax than employed people?
Law firm partners do not pay less income tax than employed people (i.e. income tax is applied to a partner’s income in exactly the same way as it would be applied to an employee’s income). At the same time, law firms do not pay employer’s NI in respect of partners, because partners are not the employees of the firm; they are self-employed. There is nothing controversial about this. Reeves is just clutching at straws.
Labour is the most disappointing bunch of spineless, spiteful, hate ridden traitors.
Cannot point to a policy they’ve implemented that has helped any English people.
Seriously damaging, well done purple haired loons. Politics of jealousy.
This will flow down to lower employees as bonuses dry up and employee pay rises reduce to offset the tax increase.
It’s views like this that explains why so many people think the profession is simply a rip off business(Especially now with the growth in AI). I needed a document-was quoted £1k. by a high street firm. An on-line provider of this straightforward document charged £79. There is such a thing as fair reward! Oh, and by the way, I am so very lucky. being Welsh the government has not harmed me especially. In any event isn’t a bit hard to plead unfairness and poverty when the average salary of a partner is a reported c£316k.
Similar situation here – my private medical provider tried to charge me £1k for the use of an operating theatre when I had my gall bladder removed, but I found a camp bed, desk lamp and scalpel online for £79.
Same here. My builder wanted to charge me £1k to fix a retaining wall and Pete down the road sold me some bricks and cement for £79.
2p on income tax would sort out this mess. But it will go down badly with the knuckle-dragging Brexit voters that caused a lot of the problems. The average earner thinks they pay a lot if income tax, when they pay a pittance for what they take back.