Warning on impact of tax hikes on British LLPs
The Law Society of England and Wales has expressed concern about possible tax rises facing limited-liability partnerships (LLPs) in the legal sector in the upcoming British budget.
The solicitors’ body noted that chancellor Rachel Reeves had today (4 November) refused to rule out extending the equivalent of employer National Insurance Contributions (NICs) to LLPs.
Law Society vice-president Brett Dixon called for “a balanced approach” to tax equalisation, based on consultation and robust economic data, in the upcoming budget on 26 November.
“The chancellor must rule out a tax hike against LLPs, which could harm one of the UK’s most globally competitive sectors and undermine the growth agenda the government is working to deliver,” he stated.
Burdens
Dixon added that the British legal sector was already dealing with major regulatory changes in anti-money-laundering and compliance, as well as significant pressure from the British tax authority’s approach to tax-advisor regulation.
“Adding further burdens now risks creating a perfect storm that limits firms’ ability to invest, hire, and contribute to growth, which could prove damaging to the wider economy,” he said.
Dixon also warned of the impact of tax hikes on legal-aid firms, a significant portion of which were structured as LLPs.
Legal aid
“Often operating with tight margins, this could be a heavy blow to those firms and have a real impact on the availability of legal-aid across the country, putting further pressure on public services.”
The society pointed out that the legal sector in Britain was worth almost £60 billion, employed more than 500,000 people and exported more than £9 billion in services.
It added that “poorly designed” tax burdens could stifle investment, recruitment, and innovation and ultimately reduce jobs and hit access to justice.