Here you can find some of the common questions regarding limited liability partnerships (LLPs). If you have any more, please don’t hesitate to get in touch with us.
The ‘Cycle to work’ Scheme allows you to purchase a bike/cycling equipment up to the value of £1,000 through the business you work for, then pay back the amount in monthly instalments over the course of 12 months. The payments will be treated as gross deductions from your monthly salary, providing you with tax and National Insurance relief on the cost of the bike. Upon joining the LLP, any existing agreements to pay off the cost of your bike will remain.
Childcare schemes provide a tax-efficient way to fund your child’s care, between the ages of four and fifteen. There are currently two childcare schemes in operation. There’s the Childcare Voucher Scheme, which closed to new entrants on 4 October 2018, and the Tax-Free Childcare Scheme, which replaced the old scheme.
When you join the LLP, your statutory employment rights as an employee are carried over and replaced by a mix of statutory and contractual rights. Therefore, if you were eligible for statutory maternity pay when employed, the LLP will ensure that you receive the same amount of maternity pay you would have had in your employment when you become a member of the LLP.
Student loan deductions are taken from your pay and the LLP reserves these amounts, rather than paying them across on a monthly/weekly basis. Any ‘statutory’ student loan liability which is triggered because of your LLP profit share on your Self-Assessment tax return is then paid by the LLP, on your behalf. Where the statutory student loan liability is less than what has been reserved in a given financial year, the LLP will make a voluntary payment for the remainder. Interest is added to the amounts reserved to ensure the individual is in no worse position.
Partners in LLPs are normally taxed as if they are self-employed, which can mean that they are also assessed as self-employed for the purposes of mortgage applications. The lending criteria varies from lender to lender so it is important that you use a competent broker to assist with your mortgage application. Your broker will need to speak to us so we can explain how you are paid and ensure that the correct information is submitted to the lender.
As an LLP member, you will have to complete a personal tax return each year. Thankfully, the OC team is on-hand to manage the entire process from start to finish and submit the finalised return on your behalf once you have had a chance to review it. To ensure that this process runs as smoothly …
In addition to motor costs, other travel costs such as parking fees, tolls and congestion charges, train and bus travel can also be claimed if these relate to business trips. Food and drink or subsistence costs can also be claimed where they are incurred through the course of normal business.
For example, if you make a business journey outside of your regular working pattern or if you regularly work in different locations then these costs are usually considered allowable expenses.
Equally, where you undertake a business trip which requires you to stay away from home, the accommodation and reasonable subsistence costs will usually be tax deductible.
Partnerships have long been recognised as effective business models wherein everyone is focused on a common goal. You will know of some famous ones, such as the John Lewis Partnership or, more recently, the Charles Tyrwhitt shirt business. As with John Lewis, the pay of all partners will be linked to our success. You will still receive exactly the same money as you always have done, but now, in addition, partners will also share in the success of the partnership.