How Are LLPs Taxed in the UK? 2026/27 Guide

Updated for the 2026/27 tax year. A UK limited liability partnership (LLP) is normally tax-transparent: the LLP calculates its profit, but the members are generally taxed on their allocated shares. The LLP itself usually does not pay Corporation Tax on trading profits, although different rules can apply in unusual cases.

How tax transparency works

The LLP prepares accounts and a partnership tax return showing the taxable profit or loss and how it is divided between members under the LLP agreement. Each member then reports their share, whether or not all of the cash has been withdrawn. Profit allocation and drawings are different: drawings are payments on account of a member’s entitlement and are not normally a deductible business expense.

Tax for individual LLP members

An individual member is normally treated as self-employed for tax purposes. Their allocated trading profit is generally subject to Income Tax and, where applicable, National Insurance. For 2026/27, the standard Personal Allowance is subject to the member’s overall income and may be reduced for adjusted net income above £100,000.

Members normally make Self Assessment payments on account on 31 January and 31 July, followed by any balancing payment. A new or growing LLP can therefore create a larger January payment than members expect. Setting aside tax as profits arise helps avoid cash-flow pressure.

Salaried member rules

Calling someone an LLP member does not automatically make them self-employed. The salaried member rules can treat an individual as an employee where statutory conditions are met, broadly involving disguised salary, insufficient significant influence and a capital contribution below the required level. The conditions must be reviewed together and against the actual agreement and working arrangements.

Corporate members

A company that is an LLP member generally brings its allocated profit into its Corporation Tax computation. Anti-avoidance rules can reallocate profits where an individual member’s profit has been shifted to a connected company and the statutory conditions apply. Mixed individual/corporate structures need specialist advice before profit-sharing arrangements are changed.

Returns and filing deadlines

• Partnership return: the LLP’s nominated partner files form SA800, normally by 31 October after the tax year for paper filing or 31 January for online filing.
• Individual members: each member reports their partnership share on their own Self Assessment return, normally online by 31 January following the end of the tax year.
• Companies House accounts: these are separate from tax returns and follow Companies House deadlines.
• Corporate members: a company follows its own Corporation Tax filing and payment timetable.

For the tax year ending 5 April 2027, the usual online Self Assessment filing and balancing-payment deadline is 31 January 2028.

VAT and PAYE

The LLP is the person that normally registers for VAT, not each member separately. VAT registration is generally required when taxable turnover exceeds the prevailing registration threshold, currently £90,000, or when the forward-looking test is met. Voluntary registration may be possible below the threshold.

If the LLP employs staff—or a member is treated as an employee under the salaried member rules—it may need to register as an employer, operate PAYE and meet workplace-pension duties. Genuine profit shares paid to self-employed members are not processed as wages.

Allowable expenses and capital allowances

Business expenses are deducted in arriving at the LLP’s taxable profit when they satisfy the relevant tax rules. Private expenditure and the private element of mixed-use costs are excluded. Equipment and other capital spending may qualify for capital allowances instead of an ordinary revenue deduction. Member-specific expenses should be handled consistently and supported by the LLP agreement and records.

Losses

Trading losses are allocated between members, but relief is not automatic or unlimited. Restrictions can depend on the member’s capital contribution, other income, whether the member is active and how the relief is claimed. The commercial position and tax position should both be reviewed before assuming that a loss will generate a repayment.

Records the LLP should keep

• Signed LLP agreement and amendments
• Member admission and retirement documents
• Accounts, invoices, receipts and bank statements
• Profit-allocation calculations and drawings accounts
• VAT and payroll records where relevant
• Evidence supporting expenses, capital allowances and losses

Example

If an LLP earns taxable profit of £120,000 and allocates £60,000 to each of two individual members, each member normally reports £60,000 before considering their other personal income, reliefs and payments on account. It does not matter if one member withdrew only £40,000 during the year: the taxable figure follows the profit allocation, not simply the cash drawn.

See HMRC’s official partnership tax return guidance and LLP tax guidance. For formation and filing duties, read our LLP registration guide.

Frequently asked questions

Does an LLP pay Corporation Tax?

Usually not on ordinary trading profits where it carries on business with a view to profit. The members are normally taxed instead. Exceptions and special circumstances require advice.

Are LLP drawings tax deductible?

No. Member drawings are generally withdrawals against the member’s profit entitlement, not a business expense.

Do all members pay the same amount of tax?

No. Tax depends on each member’s allocated profit, status, other income, allowances and reliefs.

This guide is general information. LLP agreements, corporate members, losses and salaried member status can produce complex outcomes.