Set up and register a limited partnership

This guide explains what a limited partnership is, and how it can be created. It explains why limited partnerships must be registered with Companies House and how they are treated for tax purposes.

Guide

5 min read

1. Overview

A limited partnership is a business structure which has both general and limited partners. General partners are liable for the full amount of the partnership's debt. Limited partners are only liable for the debts or obligations that they initially invest in the business.

This guide explains what a limited partnership is, and how it can be created. It explains why limited partnerships must be registered with Companies House and how you can do this. It also tells you how limited partnerships are treated for tax purposes.

2. Definition of a limited partnership and partners

A limited partnership is any partnership that includes one or more general partners and one or more limited partners among its officers. Limited partners differ to general partners by contributing money as either capital or property valued at a specific amount.

A limited partnership is a different business model to a limited liability partnership.

Differences between general and limited partners

Any individual or legal body may be a partner in a limited partnership, as a general or as a limited partner. However, you cannot be a general and a limited partner at the same time.

You will have different debts and obligations in a limited partnership, depending on which type of partner you are. General partners are liable for all debts and obligations of the partnership. Limited partners are only liable for the debts or obligations they put into the business

Because limited partners have some form of legal protection from incurring any additional debts, they may not:

  • take out their contribution to the partnership for as long as it exists
  • control or manage the business
  • have the power to make any binding decisions for the firm

If a limited partner chooses to remove any of their original contribution they will lose their protection. They will become liable for debts or obligations up to the amount they have received from the partnership. If a limited partner opts to manage the business for a length of time, they will also become liable for any debts or obligations incurred throughout this period.

A limited partnership must be registered with Companies House.

3. Register a limited partnership

You must register a limited partnership in accordance with the Limited Partnership Act 1907.

You need to complete a limited partnership registration form - LP5 - have it signed by all the partners of the business, and return it to the Registrar of Companies. Once the form has been accepted and registered, the limited partnership will officially come into existence.

You can download limited partnership registration form LP5 from the Companies House website (PDF, 244K)

You must include the following information:

  • the firm's name and appropriate ending - for example 'Limited Partnership' or 'LP'
  • nature of the business
  • the business address
  • full names of each partner - with separate lists for general and limited partners
  • length of the partnership - if applicable
  • statement that the partnership is limited and a description of each limited partner
  • amount that each limited partner is contributing and the form that the contribution is to take

If all this information - the particulars - is included correctly, the Registrar of Companies will issue a certificate of registration.

The standard fee for registering a limited partnership is £20 - or £100 for a same-day registration.

Overseas limited partnerships cannot be registered. The business address must be an area of the UK where the principal place of business is situated.

Changing limited partnership details

You can change any details about your limited partnership by completing and returning form LP6 to Companies House. You must notify the Registrar of Companies within seven days of the change being made.

Download limited partnership form LP6 from the Companies House website (PDF, 324K)

4. Tax matters of a limited partnership

Once you've registered the limited partnership, Companies House will notify HM Revenue and Customs (HMRC). HMRC will then set up the right tax records for the partnership. Each partner in the limited partnership must register with HMRC separately to get their own tax records set up.

Find the form you need to register as a partner on the HMRC website

Generally, limited partnerships are treated the same as general partnerships for tax purposes. Like general partnerships, profits are shared amongst the members of a limited partnership. Individual members - not the limited partnership - pay tax on income or gains.

Unlike limited companies, limited partnerships are not liable for Corporation Tax. The nominated partner will need to complete a Self Assessment tax return for the partnership every year. Each member of the partnership will need to show their share of the profits on their own tax return.

5. Dissolving a limited partnership

You can dissolve your limited partnership for any number of reasons - for example financial reasons, business purposes or personal disagreements. For limited partnerships, the dissolution must be handled by the general partners unless the court decides otherwise.

However, a limited partnership cannot be dissolved through the following circumstances:

  • a limited partner giving notice, unless there is a previous agreement between the partners
  • a limited partner offering his share as security for a debt, unless there is a previous agreement between the partners
  • the death or bankruptcy of a limited partner
  • a limited partner is considered a 'person of unsound mind', unless their share cannot be determined

Notifying Companies House

The general partners are responsible for filing Forms LP5 and LP6 at Companies House even if accountants or other professionals have helped in their preparation.

The Limited Partnerships Act 1907 provides for the levying of penalties for failing to send the required forms to the Registrar.

There is no specific requirement for you to notify Companies House when dissolving a limited partnership. If you do notify Companies House of the dissolution of your limited partnership by filling in a form LP6, it will be accepted in good faith. However, the name will still remain on the index of live company names.

Watch our video Choose the right legal structure for you

Get the support you need right now

You can connect with us through the contact form, call us or contact your local Business Gateway office

Contact Us Find my local office

You might also be interested in

Set up and register a limited liability partnership

Limited liability partnerships (LLPs) offers reduced personal responsibility for business debts and are designed to be used by profit-making businesses.

Legal structures: the basics

Think carefully about which structure best suits the way that you intend to do business. The structure will affect your financial liability, tax and National Insurance and the ways your business can raise money.