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Limited liability partnerships


Last November the Chancellor announced how the government intended to deal with the taxation of Limited Liability Partnerships (LLPs) from 2001/02. This Budget confirms the government&#39s general approach.

LLPs have been developed to combine organisational flexibility with the benefits of limited liability, thus providing a modern alternative business structure. This will be particularly attractive to professional partnerships such as chartered accountants. From 6 April 2001, when LLPs come into existence, a LLP will in general be treated for tax purposes as a business carried on by partners in a partnership, rather than a body corporate.

As an anti-avoidance measure, legislation will be introduced to

  • define "investment LLP" and "property investment LLP", building on the current definition of "investment company";

  • remove exemptions for income and gains from property investment LLPs for pension funds, the pension business of life insurance companies and the tax exempt business of friendly societies where the income and gains are received in their capacity as a member of a property investment LLP; and

  • remove interest relief for investments in investment LLPs so that individuals will not be able to claim tax relief for the interest paid on monies borrowed to invest in an investment LLP.

The government will also bring forward any legislation necessary to ensure that LLPs are in general treated as partnerships for tax purposes.


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White paper — Qatar International Insights

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