Why do LLPs not need to pay corporation tax?

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Hi everybody

I run a limited company, and corporation tax is a killer. My best friend is part-owner at an LLP, and she says that they don’t have to pay corporation tax at all! That’s not fair! Why don’t LLPs have to pay it? She couldn’t tell me, she just laughed.

Appreciate the knowledge boost

Answers

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Limited liability partnerships do not pay Corporation Tax because the members (partners) of the LLP are taxed through Self-Assessment as self-employed individuals. They pay Income Tax and National Insurance Contributions on their share of the partnership’s profits. The LLP itself has no tax liability.

However, there have been recent changes to the tax rules for salaried members - you can find out more here.

a year ago
 

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