How are Limited Liability Partnership (LLP) members treated for the purposes of National Insurance Contributions (NICs)? 

This is a freeview 'At a glance' guide to LLP members and National Insurance Contributions (NICs).

At a glance

From 6 April 2015 inactive members of Limited Liability Partnerships (LLPs) are liable for Class 2 NICs.

  • Inactive LLP members are treated the same for National Insurance Contributions (NICs) purposes as sleeping partners and inactive limited partners of conventional partnerships.

In general terms, partners in a partnership are all treated as self-employed and are subject to both Class 2 and Class 4 NICs. LLP members are treated as partners. 

  • Liability for Class 2 NICs is no longer a determining factor in deciding whether individuals operate through an LLP or a partnership.
  • Under regulations introduced in 2015 the meaning of 'employment' for the purposes of Parts 1 and 6 of the Social Security Contributions and Benefits Act 1992, is amended to include membership of an LLP carrying on a trade, profession or business with a view to a profit.
  • An active LLP member, as a partner, is automatically treated as self-employed for tax, as someone carrying on a trade, profession or business with a view to profit, and they are subject to Class 2 and Class 4 NICs on their profits.

There is an exception and this is in cases where the LLP Salaried member rules apply. In those cases, the member is treated as an employee for both tax and NICs meaning that Class 1 NICs apply.

Useful guides on this topic

Salaried members: When is a partner taxed as an employee?
In some circumstances, LLP members are treated as an employee and subject to Pay As You Earn (PAYE) and National Insurance Contributions (NICs). When does this apply? 

National Insurance: What's the maximum payable?
Where individuals have multiple employments and/or self-employment there is a limit to the National Insurance Contributions (NICs) that are payable. 

External link

Social Security regulations

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