How to Set Up a Partnership in the UK | AccountingStack

The UK has three partnership structures: the general partnership under the Partnership Act 1890, the limited liability partnership (LLP) under the Limited Liability Partnerships Act 2000, and the limited partnership under the Limited Partnerships Act 1907. General partnerships register only with HMRC. LLPs and limited partnerships register with both Companies House and HMRC. All three are taxed as partnerships, so each partner reports their share of profits via Self Assessment.

This guide walks through the three structures, how to choose between them, the registration steps for each, and the tax obligations that follow.

The three partnership structures

General partnership (Partnership Act 1890)

The simplest UK partnership. Two or more people carrying on business in common with a view to profit. No separate legal entity — the partnership and its partners are legally one and the same. All partners have unlimited joint and several liability for partnership debts.

A general partnership does not register with Companies House. It registers only with HMRC for tax purposes. Annual accounts are not publicly filed.

Limited Liability Partnership (LLP)

Introduced by the Limited Liability Partnerships Act 2000. An LLP is a separate legal entity, like a company, with members who all have limited liability for LLP debts. LLPs combine the flexibility of a partnership with the liability shield of a company.

LLPs must register with Companies House and HMRC. They file annual accounts and a confirmation statement at Companies House. They are taxed as partnerships, so each member is taxed individually on their share of profits.

LLPs are common in professional services (accountancy, law, surveying, architecture) and in joint ventures.

Limited Partnership (Limited Partnerships Act 1907)

A specialised structure with two types of partner: general partners (with unlimited liability and active management roles) and limited partners (with liability capped at their investment but no day-to-day management role). Limited partnerships are most often used for investment funds (private equity, venture capital) where investors are limited partners and the fund manager is the general partner.

Limited partnerships register with Companies House and HMRC. Reform proposals for limited partnerships were brought forward through the Economic Crime and Corporate Transparency Act 2023, with implementation continuing through 2026.

Choosing the right structure

Three considerations:

Liability appetite

If unlimited personal liability is acceptable, a general partnership is the simplest route. If you want liability protection, an LLP is the standard choice. A limited partnership is rarely the right choice unless you are setting up a fund or specific investment vehicle.

Tax treatment

All three structures are taxed as partnerships rather than as companies. Each partner reports their share of profit through Self Assessment. There is no separate Corporation Tax charge on the partnership itself.

This contrasts with limited companies, where Corporation Tax is charged on the company and individual shareholders are then taxed on dividends or salary.

Capital and member structure

LLPs offer flexibility on profit-sharing and capital contributions through the LLP members’ agreement. General partnerships rely on a partnership agreement and the default Partnership Act 1890 rules. Limited partnerships have a rigid two-tier general/limited member structure.

For a comparison with the limited company alternative, see our guide on limited company vs sole trader — the same trade-offs apply broadly to partnerships.

Setting up a general partnership

Three steps:

1. Choose a name

Names must comply with the Business Names Act 1985. Restrictions include the same sensitive-words rules that apply to limited companies. The partnership name does not need to include “partnership” — many trade under a brand name with the partners’ real names disclosed on official documents.

2. Register the partnership with HMRC

One nominated partner registers the partnership for Self Assessment using form SA400. The partnership receives its own Unique Taxpayer Reference and files an annual partnership tax return (form SA800).

Each partner separately registers as self-employed (form SA401 for individuals; equivalent forms for corporate partners) and files their own Self Assessment return.

3. Partnership agreement

A partnership agreement is not legally required, but operating without one is a serious commercial risk. Without an agreement, the default Partnership Act 1890 rules apply, including:

• Profits and losses are shared equally regardless of capital contribution
• Any partner can dissolve the partnership at any time
• A partner’s death or bankruptcy automatically dissolves the partnership

A written agreement should cover capital contributions, profit-sharing, decision-making, drawings, expulsion, dissolution, and dispute resolution.

Setting up an LLP

Five steps:

1. Choose a name

Same rules as for limited companies. The name must end in “Limited Liability Partnership” or “LLP”. Sensitive-words rules apply.

2. Choose at least two designated members

An LLP must have at least two members, of whom at least two must be “designated members” — essentially the equivalent of directors, responsible for filings and compliance. Designated members can be individuals or corporate.

3. Confirm registered office and ID verification

The LLP needs a UK registered office. Designated members must complete identity verification under the Economic Crime and Corporate Transparency Act 2023.

4. File Form LL IN01 with Companies House

The LLP registration form. Standard online fee (verify current Companies House fee post Feb 2026 changes). Companies House issues a Certificate of Incorporation as an LLP.

5. LLP members’ agreement

Strongly recommended though not legally required. The agreement governs profit-sharing, capital, decision-making, members’ rights, and exit terms. Without it, the default Limited Liability Partnerships Regulations 2001 apply, which are minimal and unusually skewed.

Tax obligations

All three partnership structures share core tax mechanics:

Partnership return (SA800)

The partnership files an annual SA800 return with HMRC reporting total partnership profit and how it is allocated between partners.

Each partner’s Self Assessment

Each partner reports their share of profit on their personal Self Assessment return (or corporate partner’s CT600 if a company is a partner). Income tax and Class 4 NI are paid via Self Assessment.

National Insurance

• Class 2 NI was abolished from 6 April 2024 for most self-employed individuals
• Class 4 NI applies on each individual partner’s share of partnership profits, at the rates current for the year (verify 2026/27 specific rates)

VAT

A partnership registers for VAT in its own right if turnover exceeds the registration threshold (£90,000 — verify the current figure). VAT is charged on partnership supplies.

Filing and ongoing duties

If your partnership requires specialist tax or accounting support, find an accountant who specialises in partnerships.

Key takeaways

• Three structures: general partnership, LLP, limited partnership
• General partnerships register only with HMRC and have unlimited liability
• LLPs are separate legal entities with limited liability, registered at Companies House
• All three are taxed as partnerships — partners pay personally via Self Assessment
• A partnership agreement (or LLP members’ agreement) is strongly recommended
• LLPs and limited partnerships are subject to ECCT 2023 ID verification

Frequently asked questions

Do I have to register a general partnership with Companies House? No. General partnerships register only with HMRC for tax purposes. Their accounts are not publicly filed. LLPs and limited partnerships do register with Companies House.

Is an LLP the same as a limited company? No. An LLP is a separate legal entity with limited liability, but it is taxed as a partnership (each member taxed individually), whereas a limited company is taxed on Corporation Tax with shareholders taxed separately on dividends.

How is partnership profit taxed? Each partner is taxed individually on their share of profit through Self Assessment, paying income tax and Class 4 NI. The partnership itself is not subject to a separate Corporation Tax charge.

Do I need a written partnership agreement? Not legally, but strongly recommended. Without one, the default Partnership Act 1890 rules apply (equal profit-sharing, automatic dissolution on partner death or bankruptcy, freedom for any partner to dissolve at any time).

What happens if a partner leaves a general partnership? Under the Partnership Act 1890 default rules, a partner’s departure can automatically dissolve the partnership. A written agreement can override this and provide for continuation, valuation of the leaving partner’s share, and replacement procedures.

Useful resources

GOV.UK — Set up a business partnership https://www.gov.uk/set-up-business-partnership

Companies House — Limited liability partnership formation https://www.gov.uk/government/publications/llin01-application-to-register-an-llp

Partnership Act 1890 https://www.legislation.gov.uk/ukpga/Vict/53-54/39