The head of one of Britain’s best-known law firms has warned that Rachel Reeves’s reported plan to raise taxes on limited liability partnerships (LLPs) could drive professionals and entrepreneurs out of the UK, undermining London’s status as a global business hub.
James Libson, managing partner of Mishcon de Reya, said proposals to align LLP taxation more closely with standard employment rules risked punishing professionals who take on business risk and contribute significantly to the economy.
“Most people using LLPs are middle-class, upper middle-income people,” Libson said. “It means the attractiveness of living here is diminished. I’m not talking about the millionaires or billionaires — normal people will look for opportunities to work elsewhere.”
The Chancellor is said to be considering measures that would raise the overall tax burden on partnerships, following reports that senior Treasury officials believe the reforms could raise up to £1.9 billion by bringing LLPs in line with employer National Insurance contributions.
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