How are LLPs taxed?

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Can anyone tell me how I can anticipate my new LLP to be taxed? We have only just received our documents from Companies House, so we haven’t started trading or anything yet. I’d like to have a firm grasp of my new tax liabilities before I start trying to make money.

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LLPs are not taxed as a business entity so they do not pay Corporation Tax like limited companies. LLP members are taxed individually through Self-Assessment on their share of the business profits. This means that each partner (member) of an LLP is treated as self-employed for tax purposes.

Each partner must:

  • Register with HMRC for Self-Assessment.
  • Complete a Self-Assessment tax return for HMRC each year.
  • Pay Income Tax and National Insurance on their share of the profits.

The partnership itself must also be registered for Self-Assessment and complete a tax return to report the collective profits and tax of the entire firm. You may also have to register your partnership for VAT.

Click here to find out more.

a year ago
 

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