A number of professional bodies, including ICAEW, the Law Society and the British Private Equity & Venture Capital Association (BVCA), have written to Rachel Reeves warning they have grave concerns about the ‘damaging’ move and its impact on accountants, lawyers and professionals, who often structure their firms as limited liability partnerships (LLPs).

The widely trailed plan would see LLP partners charged Class 1 employer national insurance at 15% on their earnings, which the Treasury estimated could raise up to £2bn a year. But the impact on professional services would be devastating.

James Kipping, head of personal tax at MHA, said: ‘The additional tax burden is on 15% of income, presumably less the tax and NIC relief on that at up to 47% so just under 8% additional tax on a partner’s income.’

In the latest Business & Accountancy Daily Top 75 Firms Survey, 65% of the leading UK accountancy firms are structured as LLPs, being the largest and most important employers in the sector and between these firms alone they have 7,310 partners. Only the influx of private equity has reduced the number of LLPs in the accountancy sector in the last five years with 23% of the top firms now owned by external investors.

The group’s letter to Reeves called for a stop to the punitive plan to introduce a specific partnership NI charge.

‘Such a move would strike at the heart of a sector that is not only growing but actively partnering with government to deliver economic growth,’ the letter stated.

‘Introducing higher taxes on LLPs now would be a misstep and will stunt growth.

‘It would undermine the government’s stated ambition to support professional services as a growth partner and send a damaging signal to international investors.

‘At a time when firms are already facing potential major regulatory changes - from anti-money laundering compliance to evolving tax adviser rules - this additional burden risks creating a perfect storm that stifles investment, hiring, and innovation.’

When the proposal first came to light, experts across the accountancy sector warned that it would damage the profession, with many firms forced to revisit their business structures, potentially being forced to incorporate to protect their firms.

When the plan for a partnership NI rate first came to light, Ian Wright, chief policy officer at ICAEW said: ‘Professional and business services are one of the government’s eight growth sectors and any measure that actively compromises firms’ success will risk undermining growth.

‘Constant rumours and speculation fuel uncertainty and destabilise business, so we encourage the government to be honest about their plans to give firms the opportunity to plan ahead and allow them to concentrate on creating jobs and prosperity.’

This view was echoed by the legal profession, who would be equally hard hit by the proposal.

Law Society vice president, Brett Dixon, said: ‘A balanced approach to tax equalisation based on consultation and robust economic data is needed in the upcoming Budget. The chancellor must rule out a tax hike against LLPs, which could harm one of the UK’s most globally competitive sectors and undermine the growth agenda the government is working to deliver.’

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Essential reading

Top 75 Firms Survey 2025: watershed year for accountants | 28 Mar 2025

Partnership NICs will deal damaging blow to accountants | 27 Oct 2025

Plan to charge LLPs employer NICs at 15% | 22 Oct 2025

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