Budget season always brings speculation, and this year many professional firms are watching closely for potential changes to the way Limited Liability Partnerships are taxed and regulated. Proposals discussed in the public domain include an employer National Insurance style charge on member profit shares and a firmer approach to the salaried member rules. If measures of this kind appear, they could increase operating costs for LLP firms, affect partner drawings, and prompt a wider review of remuneration and governance.
For leaders planning ahead, the question is not simply how to react on the day, but how to position the firm for resilience and growth whatever the Budget delivers. One option that deserves serious attention is a move to company status with an Employee Ownership Trust. While an EOT is not a fit for every practice, it can offer material advantages in a world where the LLP cost base and compliance burden may rise.
What an EOT model offers law firms
An EOT is a trust that holds a controlling interest in a trading company for the long-term benefit of all employees. The company continues to operate with a conventional board and management team, but strategic control rests with the trust, which acts in the interests of the workforce as a whole. For law firms, this can align culture, retention, and client service with ownership in a way that is both credible and durable. It also brings a clear and familiar tax framework, with corporation tax at company level, PAYE for salaries and bonuses, and established rules on trustee governance.
Crucially, an EOT model avoids exposure to any future employer National Insurance style charge on LLP profit shares, because the firm ceases to be an LLP and trades as a company. It allows you to design reward structures that balance certainty for staff with performance incentives for senior leaders, and it provides a powerful story for recruitment. Clients increasingly value continuity and shared purpose, and employee ownership speaks directly to that.
How conversion works in practice
Because an EOT acquires shares, a pure LLP cannot sell directly to a trust. The usual pathway is to incorporate the LLP business into a new company, then sell a controlling shareholding in that company to the EOT. This requires careful planning around property, banking, vendor funding, staff transfers, and regulatory permissions with the Solicitors Regulation Authority. It also demands precise tax analysis on incorporation, on any goodwill, on stamp duty land tax if property is involved, and on the company contributions that will fund the trust’s purchase of the shares.
Done well, the result is a stable, transparent structure that supports long term investment in people and systems, with governance that clients and lenders understand.
Why engage Ison Harrison now
Ison Harrison is one of the United Kingdom’s largest employee-owned law firms, and we advise regularly on EOT feasibility, deal structuring, and post-completion governance. We bring the realism of a firm that has gone through the journey ourselves, combined with the technical depth of corporate, tax, employment, real estate, and regulatory specialists under one roof.
Our service includes a rapid impact review of your current structure and partner arrangements, scenario modelling that compares stay as LLP, incorporate as a company, and incorporate with EOT, a clear step plan covering SRA and lender consents, TUPE, partnership and member documentation, and board and trustee design, and tax analysis that maps incorporation relief, property and SDLT outcomes, company contributions, and employee bonus planning within the EOT rules. We also provide communications support so that partners, staff, and key clients understand what is changing and why.
What to do next
If you are an LLP leader who wants to be Budget ready, commission an initial options paper now. We will deliver a concise recommendation with timelines, costed steps, and the governance and tax workstreams you will need. If the Budget introduces measures that increase LLP costs, you will be able to move decisively. If it does not, you will still have a strategic blueprint for succession, culture, and growth.
To discuss EOT conversion, or simply to sense check your LLP against potential changes, contact our corporate team at Ison Harrison. We will give you a practical view, a clear route map, and a delivery partner that understands both the legal detail and the commercial reality of running a modern law firm.
