BlueCrest Supreme Court judgment — what LLPs need to know about the salaried member rules

The Supreme Court recently delivered its judgment in HMRC v BlueCrest Capital Management (UK) LLP [2026] UKSC 18 (BlueCrest), providing important clarification on the LLP salaried member rules contained in sections 863A - 863G of the Income Tax (Trading and Other Income) Act 2005 (ITTOIA 2005). 

The Court dismissed BlueCrest's appeal and endorsed a relatively narrow interpretation of the ‘significant influence’ test in Condition B. 

The decision will be of particular interest to LLPs with fixed-share, fixed-income or salaried partners and may prompt firms to review their governance arrangements and capital contribution structures. 

Here, Tax Partner Euri Yoon from our corporate tax advisory team explores what the judgment means for LLPs and outlines the practical steps that firms may now need to consider.

A reminder: how the salaried member rules work

An LLP member will be treated as an employee for tax purposes if all three of the following conditions are satisfied:

Condition A: disguised salary

At least 80% of the member's remuneration is "disguised salary" (broadly, fixed remuneration or remuneration that is not sufficiently linked to the overall profits of the LLP).

Condition B: significant influence

The member does not have significant influence over the affairs of the LLP.

Condition C: capital contributions

The member's capital contribution is less than 25% of their disguised salary.

If any one of these conditions isn’t met, the individual remains taxable as a self-employed LLP member rather than an employee. 

What did the Supreme Court decide?

The central issue before the Court was the meaning of ‘significant influence’ for the purposes of Condition B.

The Supreme Court confirmed that the relevant question is whether the member has significant influence over the affairs of the LLP as a whole, rather than simply being commercially important or responsible for a successful business unit or practice area. 

Importantly, the Court emphasised that the focus is on a member's legally enforceable rights and responsibilities, whether arising under the LLP agreement, the firm's governance framework or delegated authority. Commercial importance alone isn’t sufficient. 

As a result, factors such as:

• generating substantial fees
• managing a department or practice area
• supervising staff
• overseeing a successful client portfolio

won’t, without more, establish significant influence for the purposes of Condition B. 

By contrast, relevant considerations are likely to include meaningful participation in governance and management, such as strategic decision-making powers, management responsibilities and other rights or authority affecting the LLP as a whole. 

Practical implications for LLPs

The decision doesn’t mean that all fixed-share or fixed-income partners will automatically fall within the salaried member rules.

Each member's position must still be assessed against all three statutory conditions.

However, the judgment is likely to make it more difficult for many LLP members to argue that they fall outside Condition B merely because they generate significant revenue or hold managerial responsibilities within a particular part of the business. Instead, firms will need to consider whether the relevant partners genuinely possess LLP-wide governance rights or other legally enforceable powers capable of amounting to significant influence. 

For many LLPs, this may place greater emphasis on Condition C and ensuring that capital contribution arrangements remain robust. A member who contributes capital equal to at least 25% of their disguised salary will fail Condition C and therefore remain outside the salaried member rules, even if Conditions A and B are satisfied. 

Six actions that LLPs may wish to consider

In light of the decision, LLPs may wish to review:

1. The governance rights and responsibilities of fixed-share and salaried partners.
2. LLP agreements and committee structures.
3. Remuneration arrangements and their interaction with Condition A.
4. Delegated authorities and management responsibilities.
5. Capital contribution levels and compliance with Condition C.
6. The ongoing operation of their salaried member compliance procedures.

How we can help

The impact of the BlueCrest decision will depend on the specific facts and governance arrangements of each LLP. Our specialist tax advisory team can assist with reviewing LLP agreements, partner remuneration structures, governance rights and capital contribution arrangements.

If you’d like to discuss the implications of the decision for your LLP, call us on 0333 004 4488, send us an email at hello@brabners.com or complete our contact form.