Limited Liability Partnership (LLP)
Company formation in United Kingdom
The LLP is best suited for: Professional services firms (law, accounting, consulting), Joint ventures between two or more parties, Partnerships seeking limited liability without a corporate structure, Groups of freelancers collaborating on projects. An LLP is tax-transparent: the LLP itself does not pay Corporation Tax. Instead, each member is taxed individually on their share of the profits. Individual members pay Income Tax at rates of 20% (basic), 40% (higher), and 45% (additional), plus Class 2 and Class 4 National Insurance Contributions. Corporate members pay Corporation Tax on their share. There is no dividend tax, but members cannot benefit from the salary-plus-dividend extraction strategy available to Ltd company directors. Losses can be offset against other personal income, subject to anti-avoidance rules.
- Professional services firms (law, accounting, consulting)
- Joint ventures between two or more parties
- Partnerships seeking limited liability without a corporate structure
- Groups of freelancers collaborating on projects
Key Facts
Step-by-Step Formation Process
Choose a name for the LLP
Select a unique name ending with "Limited Liability Partnership" or "LLP". Check availability on the Companies House register.
Draft the LLP agreement
Prepare a partnership agreement setting out each member's rights, profit-sharing arrangements, decision-making procedures, and exit terms. While not legally required, operating without one means the default provisions of the LLP Act 2000 apply, which may not suit all parties.
Register with Companies House
Submit Form LL IN01 online or by post. The form requires details of the registered office, designated members (at least two), and the SIC code. At least two members must be designated members who take on additional legal responsibilities.
Receive Certificate of Incorporation
Companies House issues a Certificate of Incorporation confirming the LLP number and date of formation.
Register for taxes
Register the LLP with HMRC for Self Assessment. Each individual member must also register for Self Assessment to report their share of the profits. Register for VAT if the turnover threshold is exceeded.
Open a business bank account
Open a bank account in the LLP name. Banks typically require the Certificate of Incorporation, the LLP agreement, and identification for all designated members.
Required Documents
- Form LL IN01 (Application to Incorporate an LLP)
- LLP agreement (strongly recommended though not legally required)
- Proof of registered office address
- Identification documents for all designated members
- Proof of residential address for designated members
- SIC code for business activity
Cost Overview
Tax Treatment
An LLP is tax-transparent: the LLP itself does not pay Corporation Tax. Instead, each member is taxed individually on their share of the profits. Individual members pay Income Tax at rates of 20% (basic), 40% (higher), and 45% (additional), plus Class 2 and Class 4 National Insurance Contributions. Corporate members pay Corporation Tax on their share. There is no dividend tax, but members cannot benefit from the salary-plus-dividend extraction strategy available to Ltd company directors. Losses can be offset against other personal income, subject to anti-avoidance rules.
Pros & Cons
- Members enjoy limited liability — personal assets are protected
- Tax-transparent: profits are taxed at the individual member level, avoiding double taxation
- Flexible internal structure governed by the LLP agreement
- No minimum capital requirement
- Separate legal personality — the LLP can hold property, enter contracts, and litigate in its own name
- Members can be individuals or corporate entities
- Minimum of two members required at all times — single-member LLPs are not permitted
- Annual accounts must be filed with Companies House and are publicly available
- Members pay Income Tax and National Insurance on their profit share, which can be higher than Corporation Tax rates at upper income levels
- Less familiar to international counterparts compared to a Ltd company
- If no written LLP agreement exists, default statutory rules apply, which may create disputes
Other Structures in United Kingdom
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Get StartedThis content is educational and does not constitute legal or tax advice. Always consult a qualified professional for your specific situation. Data last verified March 2026.