UK Limited Liability Partnerships (LLP)

A Limited Liability Partnership (LLP) is a body corporate with a legal personality separate from that of its members. Each partner’s liability is, in general, limited to his or her agreed contribution to the partnership. An LLP therefore combines the organisational flexibility and tax status of a partnership, while also providing limited liability for its members.

LLPs are ‘tax transparent’, which means they do not pay corporation tax. The members – rather than the partnership itself – are each assessed to tax on their share of the LLP’s income or gains. Any non-UK source profits or gains made by an LLP will not be subject to UK tax, except in so far as its members are UK resident individuals or companies.

UK resident partners are liable to UK tax on their share of the worldwide profits of the partnership. However, where a partnership is managed and controlled abroad, UK resident partners may be entitled to be taxed on the remittance basis for their share of the profits that arise overseas if they are not ordinarily resident in the UK and/or not domiciled in the UK and they claim the remittance basis of taxation.

Non-resident partners are only liable to tax on:

  • Profits that arise in the UK, although a corporate non-resident partner will be liable on overseas profits which relate to a UK permanent establishment.
  • Their share of partnership investment income, to the extent that it arises in the UK – although a corporate non-resident partner should return its share of overseas investment income that relates to a UK permanent establishment.

Every LLP must have a registered office address. This is where all communications and notices may be sent, for example letters from Companies House. The registered office must be a physical location where notices, letters and reminders can be delivered to the LLP, but it doesn’t need to be the place of business.

Every LLP must have at least two, formally appointed designated members at all times. If there are fewer than two designated members then every member is deemed to be a designated member.

Designated members have the same rights and duties towards the LLP as any other member but also have extra responsibilities. In particular, designated members are responsible for:

  • Appointing an auditor (if needed)
  • Signing the accounts on behalf of the members
  • Delivering the accounts to Companies House
  • Notifying Companies House of any membership changes or change to the registered office address or name of the LLP
  • Preparing, signing and delivering the confirmation statement to Companies House
  • Acting on behalf of the LLP if it is wound up and dissolved.
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