City of London Law Society urges constructive dialogue on proposed LLP tax changes
The City of London Law Society (CLLS) has written to the Chancellor of the Exchequer to express concern over reports that the Treasury is considering introducing new National Insurance Contributions (NICs) on partners within limited liability partnerships (LLPs).
In its letter, the CLLS stresses that while the legal profession recognises the importance of a fair and effective tax system, the reported proposals could have unintended consequences for one of the UK’s most globally competitive and economically valuable sectors.
Colin Passmore, Chairman of the City of London Law Society, said: “We fully understand and support the Government’s objective of ensuring that everyone pays their fair share of tax. Our concern is that these particular proposals appear to have been developed without sufficient consultation or clarity as to their scope and risk undermining one of the UK’s most successful exports: English law. The CLLS and its member firms stand ready to work constructively with HM Treasury to explore any perceived imbalances, but we strongly urge a period of reflection and engagement before such measures are introduced.”
The CLLS letter outlines a series of concerns, including the potential economic and competitive impacts of a new NIC charge, the risk of uneven treatment across business structures, and misunderstandings about the nature of the LLP model - not least that it does not provide any sort of tax break as some reporting has wrongly suggested. It also highlights the wider consequences for the City’s position as a pre-eminent global legal centre - just as the Ministry of Justice is, rightly, seeking to promote English law through its newly established English Law Promotion Panel - and for the Government’s growth agenda.
Mr Passmore added: “The UK’s legal services sector contributes more than £57 billion in gross value added, supports over half a million jobs, and generates substantial tax receipts. It is a high-growth, high-value sector that underpins the UK’s global reputation for the rule of law. We would welcome the opportunity to discuss these issues directly with the Chancellor and her officials.”
The letter emphasises that the UK’s partnership model has underpinned professional services for centuries, fostering accountability, client trust, and long-term stewardship. The Society cautions that altering the fiscal treatment of LLPs without proper consultation risks disrupting well-established business structures, deterring international investment, and eroding London’s attractiveness as a base for global legal and advisory firms.
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NOTES TO EDITORS
The City of London Law Society is the professional representative body for solicitors and law firms in the City of London, including all the largest national and international practitioners. Our membership takes in more than 22,000 solicitors and 70 corporate member firms.
For further information please contact Omeet Atara (Panterra) on +44 7387107136
or [email protected] ,and visit clls.org. We are open to interview requests.