National Insurance: Partnerships

Lord Livermore Excerpts

Monday 10th November 2025 Lords Chamber

[The Financial Secretary to the Treasury (Lord Livermore) (Lab)]

My Lords, the Government do not comment on tax speculation outside of fiscal events. The Chancellor will set out the Government’s fiscal plans at the forthcoming Budget.

[Baroness Neville-Rolfe (Con)]

My Lords, given that professional services contribute some 12% to GDP, and that almost all the UK’s leading accountancy and law firms operate as LLPs, has the Minister examined the potential for unintended consequences such as increased incorporation or outsourcing, which could reduce, rather than increase, the overall tax take? I originally tabled this Question to probe the bad but rumoured idea of taxing GP partnerships in this way. Can the Minister at least rule that out?

[Lord Livermore (Lab)]

I am grateful to the noble Baroness for her question. However, she knows that I am not going to speculate or give a running commentary on the next Budget now. There has been much speculation, as is usual ahead of a Budget. A lot of that speculation is irresponsible. I am not going to comment on individual tax measures now. We will do things in the usual way. The Chancellor has asked the OBR to produce a new forecast. She will make decisions based on that forecast. We will set out our fiscal plans at the forthcoming Budget. The Chancellor will do so mindful of the importance of growth and investment to businesses and the economy.

[Lord Carlile of Berriew (CB)]

My Lords, does the Minister, as an expert in taxation matters, agree that in reality, the great majority of those who are partners in limited liability partnerships do not have any of the autonomy of self-employed persons but are treated as having such autonomy, and that it would be logical for all those who are in reality employed persons to be treated in the same way by the tax system?

[Lord Livermore (Lab)]

I am sorry to disappoint the noble Lord, but I am afraid I am not going to comment now on individual tax measures.

[Baroness Bowles of Berkhamsted (LD)]

My Lords, does the Minister recognise that the self-employed sector creates growth and increases economic participation and that self-employed people are risk absorbers without access to various state benefits? Is the suggestion floated concerning LLPs potentially the thin end of the wedge to attach more tax to all self-employment? Possibly, there is an issue, in that LLP status transfers risk from partners to societies at no cost to the partners. If there is a moral case for payment for that risk transfer, surely, it must be separately investigated, not wangled through national insurance.

[Lord Livermore (Lab)]

I am grateful to the noble Baroness for her question, the first part of which I agree with. On the rest of it, as she knows, I am not going to comment on individual tax measures right now.

[Lord Bridges of Headley (Con)]

My Lords, may I ask the Minister a very simple question? In terms of his definition of a working person, is a partner in a law firm a working person?

[Lord Livermore (Lab)]

I applaud the noble Lord’s attempt at his question. I am not going to comment on individual tax measures right now.

[Lord Sikka (Lab)]

My Lords, whether someone trades through a company or a partnership is a personal choice. That choice should not be incentivised by the national insurance system. It is wrong to hand incentives to rich accountants and lawyers to dodge employers’ national insurance just because they trade as partnerships. That differential treatment encourages abuse and avoidance strategies. Does the Minister agree, and if not, can he give reasons?

[Lord Livermore (Lab)]

My reason is very simple: I am not going to speculate on the next Budget now. I am, of course, grateful for my noble friend’s expertise in these matters.

[Lord Pannick (CB)]

My Lords, will the Minister accept that it not speculation but fact that the legal services sector brought in exports worth £9.5 billion last year? Will he also accept that it is fact, not speculation, that to increase the tax burden would inevitably damage the ability of law firms to attract cases such as international arbitration and dispute resolution from abroad when we are in competition with Singapore, Dubai and other litigation centres?

[Lord Livermore (Lab)]

I certainly agree with the first fact that the noble Lord set out, and I am happy to do so. On his second fact, that is inviting me to speculate, which I think I have made clear I am not going to do.

[Lord McLoughlin (Con)]

My Lords, without asking the Minister to speculate on what might be in the Budget, will he tell us what was meant when the Chancellor and the Prime Minister said they would not increase income tax?

[Lord Livermore (Lab)]

Again, I think that that may be inviting me to speculate on the next Budget. I am not going to give a running commentary on the speculation there has been so far. The Chancellor will set out the Government’s tax policy at the forthcoming Budget.

[Baroness Wheatcroft (CB)]

My Lords, will the Minister accept that although he continues to tell us that he is conducting his responses in the normal way ahead of a Budget, it is not the normal way, ahead of a Budget, for the Chancellor to give a speech to a press conference which is simply about the Budget?

[Lord Livermore (Lab)]

The Chancellor is entirely at liberty to set out what she wants to set out at any given point. As I said, there has much speculation ahead of the Budget. I am not going to comment on the Budget. We will do things in the usual way. She has asked the OBR to produce a new forecast for the Budget. She will take decisions based on that forecast and set them out at the forthcoming Budget.

[Baroness Kramer (LD)]

My Lords, will the Minister advise his colleagues that any new partnership NICs applied to LLPs will exclude small entities that genuinely are a variant on self-employed organisations, with similar risks, precarious income, limited benefits and lack of employment opportunity, and are, indeed, a very important path for a lot of people returning to employment or getting into employment for the first time?

[Lord Livermore (Lab)]

I am grateful to the noble Baroness for her question. I am not quite sure how many more ways I can say this: she is inviting me to comment on tax speculation, and I think I have made it clear that I am not going to do that.

[Lord Leigh of Hurley (Con)]

My Lords, going back to the last election after Labour were previously in power, Labour had to leave a note saying that there was no money left. The next time, it will have to leave a note saying that there is no money left and no entrepreneurs left. Has the Minister read the Walker report, which shows that the HMRC assessment of non-doms leaving the country was underestimated by 50% because it looked at people only on a remittance basis and had not taken into account wealthy investors who are not under PAYE, and who are leaving the country in droves?

[Lord Livermore (Lab)]

If the noble Lord wants to talk about the amount of money that is left, I am very happy to point him to the £22 billion black hole in the public finances that we inherited and that his Government sought to hide from the Office for Budget Responsibility. The same OBR has certified that the non-dom reforms the Government have implemented will raise £33.8 billion in total revenue over the five-year forecast period. This figure accounts for some non-doms who are ineligible for the new regime, choosing to leave the UK in response to these reforms. The Government will continue to work with stakeholders to ensure that the new regime is internationally competitive and focus on attracting the best talent and investment into the UK.

[Lord Garnier (Con)]

My Lords, in his earlier answer, the Minister said that much of the speculation was irresponsible, which suggests that some of it was not. Could he please list it?

[Lord Livermore (Lab)]

No. As I think I have made clear, I am not going to comment on individual tax measures.

[Lord Watts (Lab)]

Does the Minister agree with me that, if there are going to be tax increases of any sort, they should be fair and should not be borne by people who are paying PAYE, who have no choice about paying their tax—but that everyone over there seems to think that everyone else should have an opportunity to avoid it?

--- Later in debate ---

[Lord Livermore (Lab)]

I am grateful to my noble friend for his question. I am not going to comment, as he knows, on individual tax measures, but I think we can be clear that the priorities for the forthcoming Budget will be protecting our NHS and public services from a return to austerity. It should be a Budget for growth that supports businesses to create jobs and innovation; we should improve the cost of living, doing what is necessary to protect families from high inflation and high interest rates; and we should keep debt under control.

[Lord Johnson of Lainston (Con)]

My Lords, I think there may be a misunderstanding about what LLP structures are. Will the Minister agree with me on the importance of these structures, which enable people to pool their own labour? This is not a loophole; it is an opportunity for people to come together, and they are effectively charging tax on employing themselves. Will the Minister agree with me that, in principle, LLPs are a good idea, and that getting rid of them would be throwing the baby out with the bathwater? We have just had a baby in the Chamber, so I am very reminded of that. If he could answer my question, I would be very grateful.

[Lord Livermore (Lab)]

I do not know if the noble Lord was paying attention for the last 10 minutes, but I have made it extremely clear that I am not going to comment on individual tax measures.