Last updated: 14 October 2026
What is a limited liability partnership?
A limited liability partnership (LLP) is a business structure that combines the limited liability of a company with the tax treatment of a partnership. It’s a separate legal entity registered at Companies House, so members’ personal assets are generally protected from the business’s debts. For tax, an LLP is transparent: it doesn’t pay corporation tax, and each member pays income tax and Class 4 NIC on their share of the profits through Self Assessment. LLPs are popular with professional firms such as accountants, solicitors and consultants.
LLP compared with other structures
| Feature | LLP | General partnership | Limited company |
| Limited liability | Yes | No | Yes |
| Separate legal entity | Yes | No (England and Wales) | Yes |
| Tax on profits | Members’ income tax and Class 4 NIC | Partners’ income tax and Class 4 NIC | Corporation tax, then tax on salary or dividends |
| Companies House filing | Accounts and confirmation statement | None | Accounts and confirmation statement |
| Minimum members | 2 designated members | 2 partners | 1 director |
| Public accounts | Yes | No | Yes |
Salaried members
If a member is really like an employee, receiving a fixed salary with little influence and little capital at risk, the salaried member rules treat them as an employee, so the LLP must operate PAYE and pay employer NIC. All three conditions must be met for this to apply.
Tax returns for LLPs
- The LLP files a partnership tax return (SA800) each year
- Each member reports their profit share on their own Self Assessment return
- The LLP files accounts at Companies House within 9 months of its year end
- MTD for Income Tax doesn’t yet apply to partnerships
Example
Three architects form an LLP. In 2026/27 it makes a £240,000 profit, shared equally. Each member reports £80,000 on their own return and pays income tax and Class 4 NIC. The LLP files an SA800 and accounts at Companies House. If one member’s design causes a large claim, the members’ personal homes are protected beyond what they’ve invested, unless there’s personal negligence.
Pros and cons
- Pros: limited liability, flexible profit-sharing, partnership taxation
- Cons: public accounts, members pay tax on profits even if not drawn, no option to retain profits at corporation tax rates
Corporate members
A company can be a member of an LLP. Mixed membership rules can reallocate profits from a corporate member back to individual members where the arrangement aims to reduce tax.
Common mistakes
- Treating members’ drawings as salary
- Missing the salaried member rules
- Forgetting Companies House filing deadlines
- Not having an LLP agreement
Setting up an LLP
Register the LLP at Companies House with form LL IN01, giving its name, registered office and at least 2 designated members. Register it with HMRC for Self Assessment, and register each member individually. Put an LLP agreement in place covering profit shares, capital, decision-making and what happens when a member leaves, as the default legal rules may not suit your business.
Frequently asked questions
Do LLPs pay corporation tax?
No, unless it’s not carrying on a business with a view to profit.
Can an LLP have employees?
Yes, operating PAYE.
Do members pay Class 2 NIC?
No.
Can an LLP own property?
Yes, and members are taxed on rental profits.
Related: the best business structure, whether to incorporate and what a confirmation statement is.
Talk to Accotax
Want this handled for you? Our team at Accotax can help with LLP accounts and tax returns. See our limited company accountants service, or contact us for a free, no-obligation quote.
This page is general guidance based on HMRC rules for the 2026/27 tax year, checked against gov.uk on 14 October 2026. It is not personal advice, so speak to an accountant about your own situation.
