Business Start-ups

LLP Tax Matters

All profits in a limited liability partnership (LLP) are split between the members. The tax liability falls on the individual members, not the LLP itself. Most members are likely to be self-employed, so all income should be declared via self-assessment. If an LLP member is another business, they will be liable to pay corporation tax on any income they receive from the LLP.

As with other company structures, if the LLP is expecting to generate income of £64,000 or more (from 1/4/2007; previously it was £60,000), they should register for VAT. If they have employees, the LLP should set up a PAYE system to collect income tax and National Insurance contributions.

A "nominated" member of the LLP will be responsible for informing the Inland Revenue of the LLP's existence, and for filling in the annual partnership tax return. This return will also contain a partnership statement which shows how profits have been divided up amongst the members.

If you are unsure whether a limited liability partnership is right for you, we can help. We can advise you on the potential pitfalls and the benefits of an LLP,  or if a limited company is an option you should consider instead.

For more information on how Harris Lipman can help, please email InfoTax@harris-lipman.co.uk or call (020) 8446 9000.

Meet our head of tax - Martina Fitzgerald

 

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