Trowers seeks cash injection in light of HMRC partnership tax changes
Trowers & Hamlins is set to issue a cash call to its fixed-share partners in response to partnership taxation changes brought by HM Revenue & Customs (HMRC).
February 10, 2014 at 09:55 AM
2 minute read
Trowers & Hamlins is set to issue a cash call to its fixed-share partners in response to partnership taxation changes brought by HM Revenue & Customs (HMRC).
The firm plans to ask its fixed-share partners, called "participating partners", to put in 30% of the fixed portion of their salary. The amount includes a sum of £20,000 that is paid in on entering the partnership.
An increasing number of firms have been mulling over asking their salaried partners to contribute capital since the HMRC published proposals for changes to the partnership tax regime in December.
The taxman intends to close a loophole in existing legislation that allows for partners with a low stake of the equity to be termed as self-employed, which means limited liability partnerships do not have to pay national insurance contributions (NIC).
The reclassification is set to come into force in April this year, and will mean LLPs will be required to pay 13.8% employers' NIC on remuneration paid to salaried members.
Trowers has 50 participating partners with a stake in the equity plus a performance-related bonus.
The firm also has a salaried partner rank, which applies to lawyers based outside the UK office, as well as an equity rank. Neither will be affected by the planned cash call.
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