Glossary · UK
What is Limited Partnership?
A partnership structure with at least one general partner who has unlimited liability and manages the business, and one or more limited partners whose liability is capped at their investment and who take no part in management.
Full Definition
A limited partnership is a legal structure, registered with Companies House under the Limited Partnerships Act 1907, that sits between an ordinary (general) partnership and a limited liability partnership. It must have at least one general partner, who has unlimited personal liability for the partnership's debts and is responsible for managing the business, and at least one limited partner, whose liability is capped at the amount of capital they have contributed, provided they do not take part in the day-to-day management or control of the business -- a limited partner who does get involved in management can lose their limited liability protection. Limited partnerships are relatively uncommon for typical small trading businesses, which more often choose either an ordinary partnership, a limited liability partnership (which gives all partners limited liability while remaining tax-transparent) or a limited company instead. They are, however, widely used as the vehicle for private equity and venture capital funds, where the fund manager acts as general partner and outside investors participate as limited partners, contributing capital without day-to-day involvement in running the fund. Like an ordinary partnership, a limited partnership is generally tax-transparent, meaning the partnership itself does not pay Income Tax or Corporation Tax; instead each partner is taxed individually on their share of the profits.