LLP members receive income via profit-sharing salary or both. In profit sharing, members receive a percentage of the LLP’s profit shares. The profit distribution for each member is outlined in the LLP agreement. Members must pay Income Tax on the income received through profit assignment.
Likewise, LLP members can receive a salary for their work, as agreed upon in the LLP agreement. Notably, salaries are also subject to income tax and National Insurance contributions.
Furthermore, LLP members may receive a combination of both, depending on the LLP’s needs and objectives. For example, a partner may take a lower profit share in exchange for a higher salary.
