How might Rachel Reeves target lawyers, accountants and doctors in her budget?

What is the government proposing?

More than 190,000 people work in an LLP, a structure that is very popular among lawyers. Partners pay income tax on profits as they arise, but they are considered self-employed and therefore do not pay any employer’s national insurance. It would otherwise be levied at 15% on their income.

Reeves is said to consider this unfair and is expected to levy a slightly lower rate on partners, according to government sources confirming plans first reported by the Times.

Who would it hit?

This change would affect lawyers, accountants, doctors and others who typically work in a partnership structure.

The Centre for the Analysis of Taxation (CenTax) thinktank found that solicitors receive a fifth of all partnership income, averaging more than £300,000 each in partnership profits annually. The average is £118,000 a year for GPs, and £246,000 for accountants.

Last year, the partners at these firms escaped Reeves’s last change to employer NICs, which were raised to 15% from April 2025.

The expected change could mean much higher tax contributions from senior lawyers, who can take home multimillion-pound pay packets. Many City law firms operate as LLPs, including Linklaters, Clifford Chance and Freshfields.

The changes would also affect doctors working in private practice in LLPs but it is possible that not all doctors in partnerships would be affected.

The government is reportedly trying to find a way to shield NHS GPs from a higher tax bill by applying the changes only to LLPs, which are not the type of partnership typically used by those providing care for NHS patients.

However, GP locums, who are often self-employed, could be affected if they are part of, or have formed, a locum chamber LLP.

What has been the reaction?

The proposed changes have been met with fierce criticism from the City as well as from medical professionals.

David McNeill, director of public affairs at the Law Society of England and Wales, said: “Law partnerships don’t get the same tax breaks for investment as other businesses but are now having to pay the same levels of tax.

“On top of that, law firms are facing the risk of new regulation costs and bureaucracy. This makes no logical sense as a joined-up growth strategy.”

A spokesperson for the British Medical Association said applying a 15% employer NICs rate would lead to higher costs, which would then be passed on to patients, “making private care less accessible and discouraging doctors from continuing or entering private practice”.

However, Dan Neidle, a lawyer and founder of Tax Policy Associates, argued that introducing changes to LLPs and not to all partnerships would be unfair.

“If you change the rules for LLPs and not partnerships then the wealthiest law firm in the country escapes the tax,” he said. “All the others will try to find ways to change what they do. It’s a bad idea to tax two very similar things in a very different way.

“It is unfair – I don’t see why a GP earning £180,000 should pay less tax than an accountant earning £180,000.”

How much would the measure raise?

CenTax modelled that if Reeves were to introduce employer NICs on all partnerships, t would raise £1.9bn for the exchequer in the 2026/27 tax year.

This could be attractive for the chancellor, who has said she does not want to increase taxes for “working people” but must respond to a shortfall in public finances that could reach up to £40bn.

Arun Advani, who co-authored the CenTax report, said: “If [partners] are not paying the same tax as everybody else, then behind the scenes everybody else is paying more tax to pick it up.

“The idea behind what we are promoting is not that we should have an extra special tax that hammers lawyers or accountants. We should just level the playing field.”

However, Olly Cheng, an adviser to lawyers and accountants at the investment company Rathbones, said lawyers felt “very targeted” because the possible changes would not apply to all the self-employed.

“[Law firm partners] don’t get paid a fixed salary, they don’t get an employer pension contribution and all these things that come with being self-employed genuinely do apply to them,” he said. “They do pay a lot of tax already and they feel a bit victimised at the moment.”

Could those targeted just leave the country?

There has been some speculation that higher tax bills for lawyers could trigger some to search for work abroad.

“For some lawyers they can’t [move],” Neidle said. “But many lawyers at big firms, say a banking lawyer or private equity lawyer, could work in Dubai, New York or here, doing the same work for the same people.

“There would be a big incentive once you’re talking about six-figure tax changes.”

The chancellor said this month that wealthy taxpayers could expect to pay more after the next budget but she was determined not to drive them out of the UK.

Speaking in Washington DC, she said: “I want Britain to be a great place for talent. I want the UK to remain an attractive place, but we’ve got to get the balance right and I do think that if Britain is your home you should pay your taxes here.”

The Treasury said it did not comment on speculation about future changes to tax.