DOZENS of London’s fund managers are considering switching from a partnership to a company structure, and could even move abroad in the face of George Osborne’s planned tax crackdown, an industry think-tank has warned.
Half of the New City Initiative’s members would consider incorporating rather than keep their status as a limited liability partnership (LLP), a poll found.
“The LLP structure has had a hugely positive impact on the City of London over many years,” said Magnus Spence, chairman of the NCI. “It is one of the most effective ways of fostering alignment and ownership.”
The chancellor warned in his Autumn Statement that he intended to stop LLPs from abusing the structure in order to avoid tax, for example by reclassifying partners as employees. The NCI said that LLPs that become companies will actually lower their effective tax rate.