Glossary · UK
What is Limited Liability Partnership (LLP)?
A business structure combining partnership-style profit sharing and tax treatment with limited liability, widely used by professional firms such as solicitors and accountants.
Full Definition
A Limited Liability Partnership (LLP) is a business structure that combines features of a traditional partnership with the limited liability protection of a company. Like a company, an LLP is a separate legal entity registered at Companies House, which files annual accounts and a confirmation statement, and members' (partners') personal liability for the LLP's debts is generally limited to the amount they have agreed to contribute, protecting personal assets in most circumstances beyond that. Unlike a limited company, however, an LLP is tax-transparent: it does not pay Corporation Tax itself, and instead each member is taxed individually on their share of the LLP's profits through Self Assessment, paying Income Tax and Class 4/Class 2 National Insurance in broadly the same way as a partner in a general partnership, rather than receiving a salary and dividends. LLPs require a minimum of two "designated members" who take on additional statutory responsibilities, such as filing accounts and notifying Companies House of changes, similar to a company director's duties. LLPs are especially common among professional services firms -- solicitors, accountants, architects and consultancies -- where multiple partners want to share profits and management on a partnership basis but protect themselves individually from liability for the negligence or debts caused by other partners.