Limited liability partnerships in the United Kingdom

Limited liability partnerships in the United Kingdom were introduced by the Limited Liability Partnerships Act 2000. This Act introduced limited liability partnership (LLP) to United Kingdom partnership law. It was lobbied for by the Big Four auditing firms, all of which had converted by January 2003, limiting their liability for their audits.

In the United Kingdom LLPs are governed by the Limited Liability Partnerships Act 2000 (in Great Britain) and the Limited Liability Partnerships Act (Northern Ireland) 2002 in Northern Ireland. A UK limited liability partnership is a corporate body - that is to say, it has a continuing legal existence independent of its members, as compared to a partnership which may (in England and Wales, does not) have a legal existence dependent upon its membership.

A UK LLP's members have a collective ("Joint") responsibility, to the extent that they may agree in an "LLP agreement", but no individual ("several") responsibility for each other's actions. As with a limited company or a corporation, members in an LLP cannot, in the absence of fraud or wrongful trading, lose more than they invest.

In relation to tax, however, a UK LLP is similar to a partnership, namely, it is tax-transparent, that is to say it pays no UK corporation tax or capital gains tax. Instead, LLP income and/or gains are distributed gross to partners as self-employed persons, rather than as PAYE employees. It is a unique entity in its synthesis of collective and individual rights and responsibilities and its flexibility — there is in fact no requirement for the LLP agreement even to be in writing because simple partnership-based regulations apply by way of default provisions.

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