Calculator · FA 2014
FA 2014 Salaried Member Test
The three-condition Finance Act 2014 test for LLP members. Confirms whether you're partner-for-tax or deemed employee with PAYE on drawings. Suggests the fix if Condition C is the trigger.
Your position
Verdict
EMPLOYEE-FOR-TAX (PAYE applies)
Condition A — disguised salary ≥ 80% of total reward
85.7%
Condition A IS met (fails the test)
Condition B — limited LLP influence
Limited influence
Condition B IS met (fails the test)
Condition C — capital < 25% of disguised salary
22.2%
Condition C IS met (fails the test)
Fix to break Condition C:
Lift your capital contribution to £23,000 (25% + £1 of disguised salary). That's additional capital of £3,000. Qualifying loan interest relief under ITA 2007 s.398 makes the borrowing cost deductible.
Notes: Indicative model of the Finance Act 2014 Salaried Member Rules for LLP members. All three conditions (A + B + C) must be met for the member to be deemed an employee for tax. Failing any single condition keeps the member as partner. Condition C is typically the most flexible defensive lever — capital contribution structuring.
This calculator gives a directional read on the FA 2014 position. Real audits consider additional facts: nature of management influence, structure of bonus arrangements, the "disguised salary" classification of any deferred compensation, capital account interest treatment.
Frequently asked
- What is the FA 2014 Salaried Member test?
- From 6 April 2014, a member of an LLP is deemed an employee for tax purposes if all three conditions are met. Condition A: 'disguised salary' is at least 80% of total reward. Condition B: limited rights to influence the LLP's affairs. Condition C: capital contribution less than 25% of disguised salary. If all three apply, PAYE applies to drawings as if salary.
- Do all three conditions need to be met?
- Yes. The deemed-employee treatment only applies if ALL THREE conditions are satisfied. Failing any single condition keeps the member as partner-for-tax. Condition C is typically the most flexible defensive lever — capital contribution structuring.
- How do I fix Condition C?
- Lift your capital contribution above 25% of your disguised salary. A member with £100,000 disguised salary needs £25,001+ of capital to break Condition C. Bank loans funding the capital attract qualifying loan interest relief under ITA 2007 s.398.
- What's 'disguised salary'?
- Total reward that is fixed or determined without reference to LLP profit. A pure profit-share member has 0% disguised salary (fails Condition A — passes test). A fixed-share member with £80,000 fixed plus £5,000 profit-linked has 94% disguised salary (passes Condition A — fails test on that condition).
Need the quarterly audit done properly?
FA 2014 positions drift as roles change. Quarterly audit catches it before HMRC does.