Limited Liability Partnership
Limited Liability Partnerships (LLPs) established under the Limited Liability Partnership Act in the United Kingdom are hybrid legal structures that combine features of both traditional partnerships and corporate entities. These structures allow for operational flexibility while limiting each partner’s liability to the extent of their agreed capital contributions.
The formation of an LLP involves minimal procedural requirements, and the registration process is typically straightforward. There are no statutory mandates regarding internal corporate roles such as directors or company secretaries, nor are there obligations to maintain share capital or hold formal company meetings.
An LLP must be formed by at least two members. These members may be individuals or corporate entities. The internal governance of the LLP is defined by a partnership agreement, the content of which is largely determined by the partners themselves. The legislation imposes few mandatory provisions, allowing significant discretion in how the partnership is organized and operated.
UK LLPs are distinguished from traditional limited partnerships primarily in two respects:
- Legal Personality: An LLP is recognized as a separate legal entity. It can enter into contracts, own assets, initiate or defend legal actions, and operate independently of its members.
- Limited Liability: All members benefit from limited liability, which is confined to their individual contributions. Unlike limited partnerships, LLPs do not require any member to bear unlimited liability.
Management duties within an LLP may be assumed by one or more of the partners or an appointed manager. There is no requirement for a resident manager, and in some cases, appointing one could have implications for UK tax liability.
Details concerning the LLP’s partners and individuals with significant control (beneficial owners) must be disclosed and are publicly accessible via the UK Companies House register. LLPs are also obligated to file annual financial statements and submit a partnership tax return to Her Majesty’s Revenue & Customs (HMRC).
LLPs are considered fiscally transparent entities under UK tax law. The LLP itself is not subject to corporate income tax, and profits are treated as flowing directly to the members. Members are responsible for reporting and paying tax on their respective share of the LLP’s income, regardless of whether these profits are actually distributed.
For members who are UK tax residents, taxation applies to their share of worldwide LLP income. Non-resident members are generally liable for UK tax only on income arising from UK-based activities or assets. In such cases, non-residents must file UK tax returns—either as individuals or corporations—depending on their status.
The tax transparency status of UK LLPs is widely recognized across jurisdictions, meaning members typically declare their share of profits in their country of tax residence, irrespective of distributions.
Upon formation, a tax identification number (TIN) is automatically issued by HMRC for the LLP.
UK LLPs represent a legally recognized and adaptable structure suitable for a variety of cross-border and domestic business activities. While they do not incur corporate taxes themselves, members must comply with disclosure and filing obligations, and remain alert to potential tax liabilities based on residency and source of income. The combination of legal personality, limited liability, and fiscal transparency makes LLPs a distinctive and often practical choice for structuring professional or commercial ventures.
Legal
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. The identity of the LLP registered members is publicly disclosed. Partnership agreements remain confidential.
At a 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 can use a PO Box but must include a physical address and postcode. It can be used as 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 is 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.
A UK LLP is a fiscally 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
- Members 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
- - Minimum registered capital
- - Minimum paid up capital
- GBPAny Capital currency
- 100% Foreign-ownership allowed
- 2017 AEOI
Taxes
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 (in case of a member that is a natural person), or corporate income (in case of a member that is a company).
If the LLP's partners are tax resident in the UK, they pay personal income taxes (if the member is a natural person) or corporate income taxes (if the member is a company) on income generated by the LLP.
If the LLP members are nonresidents, foreign-source income (that is income attributed to foreign activities or to assets situated or issued outside of the UK) generated by a UK LLP may not be subject to taxation in the UK.
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 of up to 40%. The total tax-free allowance for a surviving spouse/partner is GBP 1,000,000. The 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
Country details
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.
In 2016, a majority of 51.9 percent of voters in the United Kingdom chose to exit the European Union. The UK officially departed from the EU in 2020. The EU-UK Trade and Cooperation Agreement took effect on May 1, 2021.
The United Kingdom operates as a parliamentary monarchy with King Charles III serving as its head of state, succeeding Queen Elizabeth II, who held the title of the longest-reigning and longest-living British monarch until her passing on September 8, 2022. King Charles also fulfills the role of the Head of State for the other fourteen nations within the Commonwealth of Nations, establishing a personal union between the United Kingdom and these countries.
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 sixth 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. The 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.