Set up and register a limited partnership

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, whereas limited partners are only liable for the debts or obligations that they initially invest in the business.

There may be benefits for running your business as a limited partnership – however, there are certain procedures that you are required to follow as 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 you can do this. It also tells you how limited partnerships are treated for tax purposes.

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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 partner 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. For more information, see the page on partnerships in our guide on legal structures: the basics.

Differences between general and limited partners

Any individual or legal body – for example a company – may be a partner in a limited partnership, either 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, and become liable for debts or obligations up to the amount they have received from the partnership. In addition, if a limited partner opts to manage the business for a length of time, they will become liable for any debts or obligations incurred throughout this period.

A limited partnership must be registered with Companies House. For more information, see the page in this guide on how to register a limited partnership.

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How to register a limited partnership

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

To register, 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 form LP5 has been accepted and registered, the limited partnership will officially come into existence.

You can download limited partnership registration form LP5 [opens in a new window].

You must include all possible information on the limited partnership registration form, specifically the:

• firm’s name and appropriate ending – for example ‘Limited Partnership’ or ‘LP’
• nature of the business
• 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 as 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 [opens in a new window].

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Tax matters of a limited partnership

Once you’ve registered the limited partnership with Companies House, using form LP5, they will notify HM Revenue and Customs (HMRC), so you don’t need to do this. 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- Opens in a new window.

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.

For more on tax see the page on tax matters of a partnership in our guide on how to set up and register a partnership. This guide includes information on VAT, PAYE for employers and the Construction Industry Scheme.

For information about Self Assessment see our guide: introduction to Self Assessment.

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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.

A limited partnership cannot be dissolved through any of 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. However, 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 but the name will still remain on the index of live company names.