BlueCrest and the salaried member rules: What LLPs should consider now

What did the Supreme Court decide in the BlueCrest case?

The recent Supreme Court’s decision in HMRC v BlueCrest Capital Management (UK) LLP is an important reminder that LLP members are not automatically treated as self-employed simply because they hold member status. For investment LLPs and other professional partnerships, the judgment highlights the importance of reviewing how members are paid, what influence they genuinely have, and whether the LLP agreement supports the tax position being taken.

In this case, the tax and national insurance at stake is around £200m. BlueCrest argued that the relevant members should be taxed as self-employed individuals. HMRC argued that the salaried member rules applied, meaning those members should be treated as employees for income tax and National Insurance contributions purposes.

On 1 July 2026, the Supreme Court broadly agreed with HMRC. It found that the relevant remuneration was disguised salary for Condition A (see below) purposes and confirmed that significant influence under Condition B (see below) must be based on legally enforceable rights and duties, not informal influence or commercial importance. 

Importantly, though, the Condition B analysis has been remitted back to the First-tier Tribunal for reconsideration using the correct legal test, so there is a further ruling to come. 

The key findings from the decision

The salaried member rules are designed to identify LLP members who are, in substance, closer to employees than traditional partners for tax and national insurance purposes. Where all three statutory conditions are met, the member is treated as an employee for tax purposes. If any one condition is not met, the member remains taxed as a self-employed member.

Condition A: disguised salary. Condition A is designed to identify genuine profit-sharing characteristics of traditional partnerships, not structures that retain a nominal link to profits and the Supreme Court found that this case did not. The condition looks at whether at least 80% of expected remuneration is fixed, varied without reference to the LLP’s overall profits or losses, or not in practice affected by them. 

The Supreme Court found that members did receive a disguised salary, fundamentally finding that remuneration based mainly on individual portfolio performance was not treated as genuine sharing in the LLP’s overall profits. 

Condition B: significant influence. Under the legislation, Condition B is met where the mutual rights and duties of the LLP and its members do not give the individual member significant influence over the affairs of the LLP. 

The judgment from the Supreme Court provides useful guidance on what will, and will not, count as significant influence for these purposes.

• Influence must come from legal rights. The relevant influence must be based on the member’s legally enforceable rights and duties as a member. Informal status, seniority, personal performance, client relationships or the size of a member’s book of business will not be enough on their own.
• The LLP agreement is central. The focus is on the LLP agreement and the governance framework it creates. Influence does not need to be contained in one express clause if it can be traced back to the agreement, for example, through a formal committee role or delegated authority.
• The influence must relate to the LLP as a whole. Significant influence needs to be meaningful, commercial and practical and be in respect of the affairs of the LLP overall, not just a particular desk, portfolio, function or business line.
• Operational discretion is not enough. Day-to-day decision-making, even over high-value investment decisions, will not usually be sufficient if it does not give the member a genuine say in the wider governance or strategic direction of the LLP. Conversely, where a member has an influential say in the LLP's affairs simply because they are a high performer or their view is highly regarded by other LLP members, this will not alone be enough to be seen as influencing the LLP. 

Condition C: capital contribution. This condition is met if a member's capital contribution is less than 25% of their expected disguised salary for the year. BlueCrest conceded this point throughout, and it was not in point in the Supreme Court Ruling. 

What LLPs should review now?

The decision does not mean that LLP structures are ineffective, but it does reinforce the need for careful design, documentation and periodic review. LLPs and other professional partnerships should consider whether their current arrangements would stand up to scrutiny if reviewed by HMRC.

• LLP agreement: Do members have meaningful and enforceable governance rights, or are those rights largely nominal?
• Remuneration: Are members genuinely exposed to overall LLP profits and losses, or is pay mainly driven by individual or team performance?
• Influence: Can the firm evidence voting rights, committee roles or delegated authority that give members a meaningful say in the LLP’s affairs as a whole?
• Historic exposure: Could HMRC challenge the previous treatment of members as self-employed, with potential PAYE and employer NIC consequences?

How can Bishop Fleming help?

We are already helping partnerships assess the impact of the BlueCrest judgment, identify risk areas and consider practical next steps. This includes reviewing LLP agreements, remuneration arrangements, capital contributions, and historic filing positions.

If your partnership has fixed-share, junior, salaried, bonus-driven or performance-based members, now is a sensible time to review the position and ensure the legal documents, commercial reality and tax analysis all support the treatment being applied.

Please do get in touch with one of our experts if you would like to discuss this further.