The UK's professional services sector has breathed a collective sigh of relief after Chancellor Rachel Reeves opted against introducing a targeted tax hike on Limited Liability Partnerships (LLPs) in her Autumn Budget, delivered on Wednesday, 26th November 2025.
Sector-Wide Relief as Threat Recedes
Speculation had been mounting that the Treasury was considering adding a new layer of taxation on LLPs, a business model used extensively by law firms, accountancy practices, and some GP surgeries. This move, which would have marked a significant shift, provoked a flurry of anger and concern across the industry.
The LLP structure, which has been in force for 25 years, allows partners to benefit from limited liability while the partnership itself does not pay corporation tax on its profits. Instead, tax is paid individually by the partners on their share of the income.
Substantial Economic Contribution Highlighted
In the weeks leading up to the Budget, professional bodies from all corners of the sector united to warn the government against the proposed measure. They argued that professional services partnerships are the cornerstone of the UK economy.
The figures presented were substantial: the total tax contribution of the financial and related professional services industry reached £110.2 billion in 2023. Furthermore, employment taxes from this sector alone totalled a massive £55.1 billion.
Lobbying Efforts Pay Dividends
The sector's intense lobbying campaign ultimately proved successful. The Law Society had previously demanded "absolute clarity" that the plan was off the table, and following the Budget's announcement, it was confirmed that the lobbying of the Treasury had paid off.
In a statement, Law Society president Mark Evans said: “The Law Society has been lobbying the government on behalf of our members to ensure that firms using LLPs will not face a new tax in today’s Budget. Leaders from across the professional services sector came together this month to write to the Chancellor to warn against such a measure and how damaging it would be for the UK economy.”
Echoing this sentiment, Olly Cheng, senior financial planning director at Rathbones, added that while a tax on LLPs might have raised additional revenue, it would have unfairly burdened a group that already contributes significantly to the Treasury. “The LLP structure exists for legal protection – not to avoid national insurance,” Cheng emphasised.
The decision represents a significant victory for the professional services industry, allowing it to continue operating under a familiar and favoured structure without the immediate threat of a disruptive tax change.
