Jurisdiction(s):
United Kingdom

Related legal acts

Key definition

Limited Liability definition

What does Limited Liability mean? In legal practice, limited liability means an owner’s personal exposure for a business’s debts is capped because the business has a separate legal personality. In a company limited by shares, a shareholder’s liability is limited to any unpaid amount on their shares. In a company limited by guarantee, a member’s liability is limited to the sum they agree to contribute on a winding up. These outcomes are set by statute (UK Companies Act 2006; Irish Companies Act 2014) and are broadly consistent across England and Wales, Scotland, Northern Ireland and Ireland. Related forms include UK limited liability partnerships...

UK LLP taxation: transparency, salaried member rules (Conditions A to C, BlueCrest), TAARs, loss of transparency and CGT, group reliefs, VAT/SDLT/stamp, double tax treaties, investment LLPs

Published by a LexisNexis Tax expert

Practice notes

A UK Limited liability partnership (LLP)

For Company law purposes, a UK limited liability partnership (LLP) is a corporate body, but for tax it is generally treated like a Partnership—that is, it is tax transparent.

Where an LLP carries on a trade, profession or business with a view to profit, profits and gains are ordinarily taxed on the members, not on the LLP itself.
Transparency also means members are taxed on the LLP’s profits and gains as they arise, whether or not any amounts have been distributed.
In some cases this treatment may not apply, or can be lost; see When is an LLP not tax transparent? below.
Members are taxed on their shares of the LLP’s profits in the same way as partners in other forms of partnership; see Practice Note: Taxation of general partnerships.
However, there are rules that apply only to LLPs, and those LLP‑specific provisions are considered in this Practice Note...

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Web page updated on 21/05/2026

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