Chancellor Rachel Reeves is reportedly preparing a sweeping tax measure aimed at high-earning professionals, particularly those working through limited liability partnerships (LLPs) such as law firms, accountancy practices and some medical partnerships. The plan, which could raise around £2billion, is designed to plug a sizable hole in the public finances, and may form a central plank of the upcoming Budget.

Under current rules, many professionals working through LLPs are treated as self-employed, which means their firms do not pay employer’s National Insurance contributions (NICs) on their behalf. The Government argues this creates a tax “inequity” between LLP partners and employees.

According to think-tank analysis, closing this loophole could generate around £1.9billion annually.

Some reports say a senior solicitor earning around £316,000 via an LLP could face an extra tax bill of about £23,000 under the proposed changes.

The proposed tax rise is expected to hit an estimated 190,000 + professionals operating via LLPs. The major sectors in the spotlight include:

• Lawyers/solicitors (average take-home profits around £300,000+ for LLP partners)

• Accountants and other financial professionals

• Some medical partnerships where the LLP model is used (though the impact on GPs is reported to be less clear)

The move forms part of Reeves’s effort to fill a £30 billion fiscal gap, as public borrowing reaches its highest level since the pandemic.

The Chancellor has repeatedly said that those with the “broadest shoulders” should pay their fair share, arguing that professionals benefiting from tax-efficient business structures must contribute more to the public purse.

If implemented, the measure would add a significant cost to those affected. A solicitor drawing profits of about £316,000 from an LLP could face an additional annual tax bill of roughly £23,000 under the proposed change.

For law firms and partnerships that rely heavily on this model, the impact could be substantial. Critics have already warned that such a move would hit the middle classes and could discourage investment in professional services, one of the UK’s most globally competitive sectors.

The Chancellor’s plans come as she faces growing pressure from markets and opposition MPs over the state of public finances.

Latest figures show UK borrowing has surged to nearly £100billion for the first half of the financial year, £7.2billion more than forecast, leaving the Treasury with limited room to manoeuvre.

Reeves is said to be considering other revenue-raising measures, including a possible “mansion tax”, which could take the form of an annual levy on high-value homes or an extension of capital gains tax to main residences.

Speaking at an investment summit this week, the Chancellor admitted the economy was “not working as it should” and insisted her focus was on restoring stability and fairness.

“Our economy is not broken, but for too many people it’s not working as it should,” she said. “Bills are too high, businesses don’t have the tools they need, and people feel they’re putting more in but getting less out. That has to change.”