The UK’s ‘Salaried Member’ Rules for LLPs: Supreme Court judgment in BlueCrest v HMRC

Posted Tuesday 1st September 2026

On 1 July 2026, the UK Supreme Court handed down its judgment on BlueCrest Capital Management (UK) LLP v HMRC, providing important clarification on when LLP members can be treated as self-employed partners, rather than employees, for tax purposes.

What are the LLP salaried member rules?

An individual member of a Limited Liability Partnership (an “LLP”) is typically treated as a self-employed partner for the purposes of income tax, National Insurance and other relevant taxes/levies.

The LLP salaried member rules were introduced in 2014 as a response to perceived avoidance of PAYE and national insurance arising where individuals who would otherwise be taxed as employees were instead made members of the LLP, thus obtaining self-employed tax treatment.  Where the rules apply, the member is treated as an employee for income tax and National Insurance purposes.

The LLP salaried member rules will apply where all three of the following conditions are met in respect of an individual:

• Condition A (Disguised Salary): at least 80% of the member’s total remuneration is fixed or otherwise treated as “disguised salary”.
• Condition B (Significant Influence): the member does not have significant influence over the affairs of the LLP.
• Condition C (Capital Contribution): the member’s capital contribution is less than 25% of their expected “disguised salary” for the tax year.

If not all of the conditions are satisfied (i.e. if the member ‘fails’ at least one), they will continue to be treated – and taxed – as a self-employed member of the LLP.

The key issue – what counts as ‘Significant Influence’?

The most important aspect of the judgment concerns Condition B.

The Supreme Court confirmed that significant influence must generally arise from a member’s legally enforceable rights and responsibilities under the LLP’s governance framework. Informal influence, commercial importance or a strong track record alone will not be enough.

In practice, this means that being a high performer, leading a team or generating substantial revenue does not automatically give a member ‘significant influence’ for tax purposes.

Instead, LLPs should look at whether members have formal governance rights, such as voting rights, management responsibilities or specific powers granted under the LLP agreement.

What about Condition A, the disguised salary?

The Court also ruled that remuneration linked primarily to an individual’s or team’s performance – including discretionary payments – will not automatically be treated as a profit share simply because it depends on the LLP remaining profitable.  An argument that discretionary payments to an individual may be cut as a result of overall (poor) performance of the LLP was rejected by the court.  LLPs should therefore review remuneration structures that are intended to fall outside the disguised salary rules, with particular focus on any arrangements which do not apportion the LLP’s profits and losses between its members in the manner of a traditional partnership.

What does this mean for LLPs?

The decision is an important and useful reminder that LLP documentation matters. LLPs that want members to genuinely fall outside the salaried member regime should consider whether their LLP agreement and governance arrangements properly reflect how the business is run in practice – compliance with the rules must be reflected / evidenced in the LLP agreement.

In particular, it is advised that LLPs should review:

• LLP agreements and voting rights;
• management committee structures;
• delegated decision-making powers; and
• whether key governance rights are clearly documented.

Key Takeaways:

The Supreme Court has made clear that significant influence is determined by legal rights (principally in the LLP agreement), not informal status or commercial success. LLPs should therefore ensure that members who are intended to be treated as self-employed have appropriately documented significant – and genuine – governance rights and responsibilities.

This judgment will be relevant not only to large professional services firms but also to growing LLPs and founder-led businesses that rely on LLP structures and want certainty over the tax status of their members.

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This article is for reference purposes only. It does not constitute legal advice and should not be relied upon as such. Specific legal advice about your specific circumstances should always be sought separately before taking or deciding not to take any action.

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