Limited Liability Partnership
Companies incorporated under the Limited Liability Partnership Act are hybrid entities that provide to its members the flexibility of a partnership arrangement and limit liability to the capital contributed by each member.
An LLP requires minimal corporate formation requirements and a fast registration procedure. There are no company structure requirements for the management of an LLP, nor are there provisions for company meetings, directors, secretary, or capital.
UK LLPs are fiscal transparent entities, all profit received by the LLP is considered to be transferred to its members and taxed at the personal level. Members pay personal income taxes on LLP profits proportionally to their share of participation in the LLP company, whether distributed or not.
This means that an LLP is not seen as a separate entity for taxation purposes, and therefore if its members are non-UK tax residents they will only be required to pay taxes in the UK on income sourced from the UK.
Although, if their country of residence taxes foreign-source income, the members may be subject to pay taxes on all foreign profits in their home country of residence, if it is required by the legislation of that particular country.
If its members are tax residents in a no tax or territorial tax country and no income is sourced from the UK, they may operate with an LLP fully tax-exempt, while benefitting from the reputation of an UK incorporated entity.
It is important to note that certain countries do not recognize the pass-through status of an LLP, if the LLP is deemed to be tax resident in one of such countries, it may be subject to corporate income tax.
An LLP must be set up by a minimum of two members, and although they are tax neutral entities, there are certain compliance requirements, including submitting annually financial statements to the UK Companies House and Partnership Tax return to the HMRC (Her Majesty Revenue & Customs).
A LLP operating agreement is not mandatory, but is highly recommended and may be arranged by its members according to their needs.
If the LLP accrues more than GBP 81,000 that is derived from local earnings, then it must register for the UK VAT.
All in all, a UK LLP is a flexible structure that benefits from being incorporated in a reputable jurisdiction and international financial and trade centre, while being a potentially tax-free entity. UK LLPs are powerful vehicles commonly used to provide international professional services, conduct international trade, e-commerce, Amazon FBA and as a payment processing subsidiary.
Country code – GB
Legal basis – Common law
Legal framework – UK Limited Liability Partnership Act, 2001
Company form – Limited Liability Partnership (LLP)
Liability - The liability of members is limited to the extent of their capital contributions.
Capital – There are no minimum capital requirements or guaranteed unit obligations from members of an LLP. Members will negotiate the amount of capital they wish to contribute to the partnership amongst themselves, deciding what is economically best for them and their limited liability partnership. Capital may be in any currency. More than one class of Membership interest is allowed, which allows flexible structuring.
Members – An LLP must be set up by a minimum of two members, who may be natural or legal persons, resident or non-resident, without limitations. Identity of the LLP registered members may be publicly disclosed. Partnership agreements remains confidential.
At minimum, two of the members must be designated members. The designated members have principal responsibility for statutory filing requirements and associated matters.
Manager – LLP members may act as managers, or alternatively they may appoint a manager. Corporate managers are allowed. Details may be available to the public.
Registered Address – An LLP registered office address is where official communications will be sent, for example letters from Companies House. The address must be a physical address in the UK and in the same country the LLP is registered in, for example a company registered in Scotland must have a registered office address in Scotland.
A company limited can use a PO Box, but must include a physical address and postcode. It can be used a home address or the address of the person who will manage Taxes. LLP address will be publicly available on the online register.
General Meeting – There is no statutory requirement for any formal meetings of members.
Electronic Signature – Permitted.
Re-domiciliation – Migration of domicile is not permitted.
Compliance – An LLP must maintain records about the company itself, financial and accounting records and supporting documentation, which must be kept for 6 years. Records must be kept at the registered office.
All UK Companies must file an annual return with their accounts with the HMRC Companies House, which are available to the public. Companies must appoint an auditor and file their accounts audited. A company may qualify for an audit exemption if it has at least 2 of the following:
An annual turnover of no more than £10.2 million; assets worth no more than £5.1 million; 50 or fewer employees on average.
An UK LLP is a fiscal transparent entity, therefore profits and losses are taxed at the personal level.
Each member of the LLP will receive an individual self-assessment tax code, they must all file their own self assessments all monies received from the liability partnership.
Non-UK residents who do not qualify as UK residence for taxation purposes and do not earn US-source income, do not have to file self-assessment and not subject to UK income taxes, however they are responsible for paying taxation in the country they reside.
- Members not disclosed
- Managers not disclosed
- Corporate members permitted
- Corporate manager permitted
- Local manager required
- Registered office or agent required
- Annual meeting required
- Redomiciliation permitted
- Electronic signature
- Annual return
- Audited accounts
- Audited accounts exemption
- Exchange controls
- Common law Legal basis
- 2 Minimum members
- GBP 1 Minimum registered capital
- - Minimum paid up capital
- GBPAny Capital currency
- 100% Foreign-ownership allowed
- 2017 AEOI
Corporate Income Tax – An UK LLP is a tax transparent entity, which means that any profits are passed through to the members to be reported as personal income.
Therefore, if LLP owners are Non-UK Residents (and not subject to Personal Income Tax) and does not operate and generate profit from the UK, does not lease or own properties within the UK and does not have UK employers, offshore income accrued by a UK LLP may not be subject to taxation.
Personal income tax – An individual is tax resident in the UK if he or she spends at least 183 days in a year within the country or his or her only home is in the UK for at least 91 days in a year or work full-time in the UK or fulfills one of the previous conditions during the three preceding years.
If the individual is resident but not domiciled (permanent home) in the UK, his or her investment income and capital gains will be only taxed if are remitted to the UK.
Personal income tax rates are progressive up to 45% on income exceeding GBP 150,000. Dividends are also taxed at progressive rates (7.5%, 32.5% and 38.1%) with an allowance of GBP 5,000.
Interest income is taxable as ordinary income, but a 0% may apply to the first GBP 5,000. Rental income is taxed depending on the location of the property.
Capital gains are taxed separately. The first GBP 11,000 may be tax-exempt. Gains exceeding this amount up to 32,000 may be taxed at 10% and 20% on the excess.
Other taxes – Local authorities levy real property tax on business premises. There is a stamp duty of 0.5% on the transfer of UK shares payable by the transferee. Stamp duty land tax applies on transfers of real property, rates are between 0% and 15%. There is an Annual tax on enveloped dwellings (ATED) levied to companies who own residential properties valued at more than GBP 500,000.
There is also an inheritance tax up to 40%. The total tax-free allowance for a surviving spouse/partner is GBP 1,000,000. UK does not levy wealth taxes.
V.A.T. standard rate is 20%, reduced rates of 5% and 0% may apply to certain items.
- Tax transparent entity
- Offshore Income Tax Exemption
- Offshore capital gains tax exemption
- Offshore dividends tax exemption
- CFC Rules
- Thin Capitalisation Rules
- Patent Box
- Tax Incentives & Credits
- Property Tax
- Wealth tax
- Estate inheritance tax
- Transfer tax
- Capital duties
- - Offshore Income Tax Rate
- - Corporate Tax Rate
- 19% Capital Gains Tax Rate
- 0% Dividends Received
- 0% Dividends Withholding Tax Rate
- 20% Interests Withholding Tax Rate
- 20% Royalties Withholding Tax Rate
- 1 Losses carryback (years)
- Indefinitely Losses carryforward (years)
- FIFO Inventory methods permitted
- 110 Tax time (hours)
- 8 Tax payments per year
- 12.00% Social Security Employee
- 13.80% Social Security Employer
- 45% Personal Income Tax Rate
- 20% VAT Rate
- 142 Tax Treaties
The United Kingdom of Great Britain and Northern Ireland (UK), is a state located in the northwest of Continental Europe. Its territory is formed geographically by the island of Great Britain, the northeast of the island of Ireland and small adjacent islands. Northern Ireland is the only part of the country with a land border, which separates it from the Republic of Ireland.
Great Britain delimits to the north and the west by the Atlantic Ocean, to the east by the North Sea, to the south by the English Channel and to the west by the Irish Sea.
The UK is a unitary state comprised of four constituent nations, Scotland, Wales, England and Northern Ireland, and several overseas territories. Populated by more than 65 million people.
The capital, London, on the River Thames, is home of British Parliament, Big Ben and the 11th-century Tower. Its official legal tender currency is the Pound Sterling (GBP), being the fourth most traded currency in the international exchange market behind the US$, the euro and the Japanese yen.
Although, UK is still a member of the European Union, its citizens voted in a referendum on June 23rd 2016, the untying of the state to the EU, the so-called BREXIT. Its terms are still being negotiated, with a 2 year term to become effective.
The United Kingdom is a parliamentary monarchy whose head of state is Isabel II. She is also the Head of State for the other fifteen countries of the Commonwealth of Nations, placing the United Kingdom in a personal union with those nations.
It has a parliamentary government, based on the Westminster system, which has been emulated around the world, one of the legacies of the British Empire. The Parliament of the United Kingdom, which meets in the Palace of Westminster has two chambers: the House of Commons (elected by the people) and the House of Lords. Any law passed by parliament requires real consent to become law. The fact that the decentralized parliament in Scotland and the assemblies in Northern Ireland and Wales are not sovereign bodies and can be abolished by the British Parliament makes the latter the most important legislative body in the country.
The United Kingdom is one of the world’s most developed countries. It is the fifth largest economy and the second largest in Europe after Germany, and ahead of France.
Its technologically developed industry is comprised mainly of machinery, transport equipment (vehicles, railways and aeronautics) and chemicals. UK is also the second European producer of oil and gas, ahead of Norway.
The services sector is the major GDP contributor, which includes the stock market, banking services and insurance companies. The London Stock Exchange is the second largest financial market after New York.
Its agriculture is highly mechanized, its main productions are potatoes, beets, wheat and barley. However, it only accounts for only 1% of GDP and only 2% of purchasing power parity. Livestock is significant, especially sheep and cattle, being a large European producer of milk and its derivatives.
Tax treaties Map
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