Key takeaways
- A limited liability partnership (LLP) gives its members limited liability like a company, but is taxed like a partnership.
- Each member pays Income Tax and Class 4 NI on their share of the LLP's profits, through Self Assessment.
- Members who are in substance employees can be treated as employees under the salaried member rules.
- The LLP files a partnership tax return with HMRC and accounts and a confirmation statement at Companies House.
- LLPs are common for professional firms and family property businesses.
A limited liability partnership (LLP) combines features of a company and a partnership. It is a separate legal entity, registered at Companies House, and its members have limited liability. For tax, however, a trading LLP is generally transparent: the members are taxed as if they were partners.
How LLP members are taxed
If the LLP carries on a trade or profession with a view to profit, its members are taxed like partners:
- each member pays Income Tax on their share of the profits for the tax year
- each member pays Class 4 National Insurance at 6% between £12,570 and £50,270 and 2% above (2026/27)
- members file their own Self Assessment returns, including the partnership pages
- profits are taxed whether or not they are drawn out
The LLP itself pays no Income Tax or Corporation Tax on its trading profits.
The LLP’s tax and filing obligations
| Obligation | Who | Deadline |
|---|---|---|
| Partnership Tax Return (SA800) | Nominated member, to HMRC | 31 January after the tax year (online) |
| Annual accounts | LLP, to Companies House | 9 months after the year end |
| Confirmation statement | LLP, to Companies House | At least once every 12 months |
| VAT returns | LLP, if registered | Usual VAT deadlines |
| Payroll | LLP, for employees (not members) | Usual RTI deadlines |
Unlike a general partnership, an LLP’s accounts are public, and it must have at least two designated members responsible for its filings. Since November 2025, members must verify their identity with Companies House.
Salaried members
Members who look more like employees than partners are taxed as employees under the salaried member rules. A member is treated as an employee if all three conditions apply:
- Condition A: at least 80% of their pay is fixed, or variable without reference to the LLP’s overall profits (“disguised salary”)
- Condition B: they do not have significant influence over the affairs of the LLP
- Condition C: their capital contribution is less than 25% of their disguised salary
If a member is a salaried member, the LLP must operate PAYE and pay employer National Insurance on their remuneration.
Corporate members and mixed membership
LLPs can have companies as members. Anti-avoidance rules stop profits being allocated to a corporate member to benefit from Corporation Tax rates where the profits really belong to an individual member, or where losses are allocated to individuals artificially.
Property and investment LLPs
LLPs are used to hold investment property, including by families. An investment LLP is still transparent: members pay Income Tax on rental profits and Capital Gains Tax on disposals. The mortgage interest restriction for individual landlords applies to members’ shares of residential finance costs. Transferring property into or out of an LLP can involve Stamp Duty Land Tax under special partnership rules.
LLP or limited company?
| LLP | Limited company | |
|---|---|---|
| Limited liability | Yes | Yes |
| Tax on profits | Income Tax and NI on members, whether drawn or not | Corporation Tax on the company; dividends taxed when paid |
| Retaining profits | No tax advantage | Can retain profits at 19% to 25% |
| Public accounts | Yes | Yes |
| Typical users | Professional firms, joint ventures, family investment structures | Most owner-managed trading businesses |
For an individual planning to reinvest profits, a company is often more tax-efficient. LLPs suit firms where profits are distributed to members and where flexible profit-sharing matters. See sole trader vs limited company and partnership tax.
Frequently asked questions
How is an LLP taxed?
A trading LLP is tax transparent: each member pays Income Tax and Class 4 National Insurance on their share of the profits through Self Assessment.
Does an LLP pay Corporation Tax?
No, not on its trading profits. A corporate member pays Corporation Tax on its own share.
What is a salaried member of an LLP?
A member who meets all three of the salaried member conditions (mainly fixed pay, no significant influence and low capital), who is taxed as an employee through PAYE.
Does an LLP have to file accounts?
Yes. LLPs file annual accounts and a confirmation statement at Companies House, as well as a partnership tax return with HMRC.
Sources
Rates, thresholds and rules in this guide were checked against HMRC and GOV.UK guidance in October 2026. Tax rules change, so check the current position on GOV.UK or with a qualified adviser before acting. This guide is general information, not personal advice.