LLP (limited liability partnership)

LLP stands for limited liability partnership. It is a UK business structure introduced by the Limited Liability Partnerships Act 2000 that blends the flexibility of a traditional partnership with the limited liability normally associated with a company. An LLP is its own legal person, separate from the individuals who run it, and is registered at Companies House.

How an LLP is structured

The people who own and run an LLP are called members rather than directors or shareholders. An LLP must have at least two members, and at least two of them are "designated members" who take on extra responsibilities such as filing accounts and the confirmation statement. The internal workings — how profits are shared, how decisions are made, how members join or leave — are usually set out in a private members' agreement.

Limited liability

Because the LLP is a separate legal entity, the members' personal liability is generally limited to what they have agreed to contribute. Their personal assets are not normally at risk for the LLP's debts, which is the main difference from an ordinary partnership where partners can be personally liable in full.

Tax treatment

For tax, an LLP is usually treated as "transparent": the LLP itself does not pay corporation tax, and instead each member is taxed individually on their share of the profits, much like partners in a traditional partnership. This combination of limited liability with partnership-style taxation is a key reason the structure is popular with professional firms.

LLPs and business lending

Credicorp lends to UK limited companies and limited liability partnerships, not to consumers or sole traders. An LLP is therefore an eligible borrower. As with a limited company, lending to an LLP is borrowing by a separate legal entity, and any facility is an obligation of the LLP itself.