Q&As

What are the tax implications where an individual is buying a member’s interest in a limited liability partnership?

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Published on LexisPSL on 10/04/2018

The following Tax Q&A provides comprehensive and up to date legal information covering:

  • What are the tax implications where an individual is buying a member’s interest in a limited liability partnership?

What are the tax implications where an individual is buying a member’s interest in a limited liability partnership?

In answering this Q&A, it has been assumed that members of the limited liability partnership (LLP) are not employees of the LLP and that the salaried members rules do not apply (for which, see Practice Note: Taxation of UK LLPs—Employment status of individual members of LLPs—the salaried member rules).

An LLP is a body corporate for company law purposes, but is generally taxed as though it were a partnership (ie it is tax transparent). This means that an LLP's profits and gains will normally be taxed in the hands of its members, rather than being assessed on the LLP itself. Tax transparency also means that the members will be taxed on the LLP's profits and gains at the time they arise, whether or not they have been distributed to the members. For more information, see Practice Note: Taxation of UK LLPs.

Members of LLPs are normally

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