Partnership changes

During 2013, Government consulted on two proposed changes to the taxation of partnerships. One change would result in salaried members of Limited Liability Partnerships being treated as employees for income tax purposes. The other change would apply to partnerships which had corporate members; the intention being to prevent profits being allocated to the corporate member, so as to benefit from the relatively low rates of Corporation Tax, while losses were allocated to individual members to be set against income which would be subject to income tax. Government has categorised its proposals as anti-avoidance measures, so it might be thought that they have little to do with trustees. However, trustees cannot always be passive investors, especially where the trust fund includes land.