Free calculator · UK 2026/27
FA 2014 Salaried Member Test
Since 2014, HMRC can deem an LLP member an employee for tax purposes if all three conditions (A, B and C) are met. Use this tool to test your position and see what it would take to break each condition.
FA 2014 Salaried Member Test
Since 2014, HMRC can deem an LLP member an employee for tax purposes if all three conditions (A, B and C) are met. Use this tool to test your position and see what it would take to break each condition.
Fixed + variable + benefits
Reward not contingent on profit (the 'disguised salary')
Your capital account balance
Finance Act 2014 Salaried Member Rules. All three conditions must be met for deemed employee status. Failing any single condition keeps partner-for-tax treatment.
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How the FA 2014 test works
HMRC introduced the Salaried Member Rules in Finance Act 2014 to prevent LLP members from benefiting from partnership tax treatment when they are economically more like employees. The test has three conditions (A, B and C); ALL three must be met for a member to be taxed as an employee.
Condition A: at least 80% of total reward is fixed and not contingent on the LLP's profits. Condition B: the member has no significant influence over the LLP's affairs. Condition C: the member's capital contribution is less than 25% of their fixed reward.
Condition C is the most commonly used defensive lever. Increasing your capital account above 25% of your fixed pay breaks Condition C — and therefore the test — even if A and B are met. Qualifying loan interest under ITA 2007 s.398 makes the cost of borrowing to fund the capital contribution tax-deductible.
Worked example: Sarah is a fixed-share member of Halcyon Legal LLP. Her total annual reward is £105,000, of which £90,000 is a fixed monthly draw and £15,000 is a discretionary profit-linked bonus. Her capital account stands at £20,000 and she does not sit on the management committee. Condition A: £90,000 fixed of £105,000 total = 85.7%, above the 80% threshold, so Condition A is met. Condition B: no management committee seat and no meaningful influence over LLP affairs, so Condition B is met. Condition C: capital of £20,000 is 22.2% of fixed reward of £90,000, below the 25% threshold, so Condition C is met. All three conditions are met and Sarah is treated as an employee for tax purposes (PAYE applies). To break Condition C, Sarah would need to increase her capital account to at least £23,000 (25% of £90,000), requiring an additional contribution of just £3,000.
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Frequently asked questions
- What happens if all three conditions are met?
- The LLP must operate PAYE on the member's drawings. The member pays income tax and employee NI on their fixed-pay element as if it were a salary. The LLP also pays employer NI. This typically increases the combined tax cost materially versus genuine partner-for-tax treatment.
- How can I break Condition C?
- Increase your capital contribution to at least 25% of your disguised salary (fixed reward). The calculator shows the target amount. If you need to borrow to fund the contribution, interest on a qualifying loan is deductible under ITA 2007 s.398. Legal advice on the structure of the capital account is recommended.
- Does this apply to traditional partnerships (not LLPs)?
- No. The FA 2014 Salaried Member Rules apply only to Limited Liability Partnerships. Traditional partnerships use the existing employment vs self-employment test for any individual member. Fixed-share partners in a traditional partnership may still face IR35-style scrutiny on disguised employment grounds.
Need help interpreting your results?
These calculators give directional figures based on published rates. Your actual position depends on firm structure, basis period adjustments, existing capital contributions, and your specific revenue profile. We model the full picture as part of our advisory work.
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