How JustAnswer Works:
  • Ask an Expert
    Experts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional Answer
    Via email, text message, or notification as you wait on our site. Ask follow up questions if you need to.
  • 100% Satisfaction Guarantee
    Rate the answer you receive.
Ask bigduckontax Your Own Question
bigduckontax, Accountant
Category: Tax
Satisfied Customers: 4956
Type Your Tax Question Here...
bigduckontax is online now

I was a partner in an LLP Partnership. My salary was £50,000

This answer was rated:

I was a partner in an LLP Partnership. My salary was £50,000 per year - tax returns were submitted for years 13/14 and 14/15 with tax liability paid. In March of 2015 myself and a collegaue were informed that the partnership could no longer support our department and we secured paid employment elsewhere. The leaving date was set as the 17 July 2015. We recieved monies from the LLP in the form of an amount equivalent to 6 months i.e 25,000 but we had alreday taken at the point ofdeparture three months drawings against this, May June and part of July £3,000 per month, the amount that I actually received was 13,000 thereafter. I am now being told that my tax liability from the partnership for 2015/16 is £10,800. Is this correct ?
Hello, I am Keith, one of the experts on Just Answer, and happy to help you with your question.
What you appear to be telling me is that you were made redundant on 17 July 2015, in the 15/16 tax year and that you were paid redundancy pay amounting to 25K. As the first 30K of a redundancy payment is tax free, so in your case this would not be taxable. The only emoluments you would receive for the period 6 April 2015 to 17 July 2015 would be subject to Income Tax, presumably based on an appropriate share of the LLP's profits or an agreed salary level. On a simplistic basis a leaving date of 17 July would create 3.5 month's working time. 50K x 3.5 / 12 = say 14.6K. Your tax liability would appear incorrect as 20% of 14.6K is of the order of 3K without taking into account your personal allowance. If there is an element of part of the LLP's profits included then it may be correct, but a much fuller explanation would appear to be needed from the Partnership to sustain the figure quoted. In any event you do not owe it to the LLP but you will owe something to HMRC when you make your self assessment tax return at the conclusion of the current tax year.
I would submit that there is a discrepancy here which the LLP must explain and the matter must be sorted out before you have to make your 15/16 declaration of income. On the face of it and from the data you have given me there is something adrift.
I do hope that I have been able to shed some light on the position for you.
On reflection, if the LLP's account periods differ from the tax year then your financial position could be skewed and their thoughts on your taxation position correct. As I told you there need to be an explanation from the Partnership.
Your question has come up again on the system, but with no follow up question from you. Could be a glitch!
bigduckontax and other Tax Specialists are ready to help you
Thank you for your support.