NI contribution hike for LLP partners to be ruled out in UK Budget

Group 1 - The UK Chancellor of the Exchequer Rachel Reeves has abandoned the plan to increase national insurance contributions for partners at law and accountancy firms, which was expected to generate £2 billion [1][2] - The decision follows Treasury analysis indicating that the proposed policy could lead to higher costs than benefits due to tax avoidance [2] - The expected fiscal gap has improved from £30 billion to approximately £20 billion, leading to the scrapping of the income tax rate increase proposal as well [3] Group 2 - The proposed national insurance contributions would have affected around 200,000 individuals and raised £1.9 billion in annual revenue, increasing the tax rate for partners by nearly 7% to about 55% [4] - There has been significant lobbying against the introduction of national insurance contributions from lawyers, Big Four accountancy firms, and private equity executives, warning of potential restructuring or relocation to avoid the tax [5] - Firms argued that any additional tax burden would likely be passed on to clients through higher fees [6]