How Can a Member Leave an LLP? 2026/27 Checklist

Updated for 2026/27. An LLP member can leave by agreement, retirement, resignation, death, expulsion where the LLP agreement permits it, or another event set out in the agreement. The legal departure, financial settlement, Companies House filing and tax treatment must all be handled separately.

Start with the LLP agreement

The LLP agreement should state how much notice is required, whether consent is needed, how the departing member’s capital and profit share are calculated, what happens to clients and work in progress, and whether restrictive covenants apply. It may also contain valuation, dispute and compulsory-retirement clauses.

If there is no relevant agreement, statutory default rules apply. A member can generally cease membership by giving reasonable notice to the other members. Expulsion is not normally available unless an express power has been agreed, so the remaining members should not assume they can vote someone out.

Step-by-step departure process

1. Review the agreement and circumstances. Identify the correct exit route, notice period and approvals.
2. Agree a departure date. This affects profit allocation, authority, tax and Companies House reporting.
3. Prepare documents. Use a retirement deed or settlement agreement where appropriate, recording releases, confidentiality, client matters and payments.
4. Calculate the financial entitlement. Reconcile capital, current account, drawings, allocated profit, loans, work in progress and any goodwill or asset value.
5. Notify Companies House. File LL TM01 for an individual member or LL TM02 for a corporate member, normally within 14 days.
6. Update operational records. Change bank mandates, insurance, engagement letters, websites, licences, HMRC records and professional-regulator details.
7. Deal with tax filings. Ensure the partnership return and the member’s own return report the correct final allocations and disposals.

Can an LLP member be expelled?

Only where the LLP agreement provides a valid power or the members reach another legally effective arrangement. The clause should be followed precisely, including notice, voting, grounds and valuation steps. Attempting to remove a member without authority can cause litigation and may not terminate membership.

Companies House notification

The LLP must notify Companies House when membership ends. Filing the termination form updates the public register, but it does not by itself settle financial rights or release the member from guarantees. The LLP should also update its register of members and any required identity-verification information under the rules in force at the time.

What happens to the departing member’s money?

The agreement normally governs repayment of capital, undistributed profit, drawings, loans and any buyout. Final accounts may be needed at the departure date, or the annual accounts may allocate profit on a time or performance basis. Payment terms, interest and security should be documented.

A departing member is not automatically entitled to a share of goodwill or unrealised value unless the agreement or negotiated settlement provides it. Conversely, an overdrawn current account may be repayable to the LLP.

Tax consequences in 2026/27

The member reports their allocated trading profit for the relevant basis period through Self Assessment. Departure may also involve disposals of interests in goodwill, property or other assets, potentially creating Capital Gains Tax. Payments described as compensation, restrictive-covenant amounts, interest or return of capital may have different tax treatments.

Payments on account may need adjustment when profit falls after departure, but reducing them too far can create interest. The LLP and member should retain the allocation calculation and settlement documents.

VAT, PAYE and payroll

A genuine self-employed LLP member is not paid through payroll for their profit share. However, a person within the salaried member rules may have employment-tax consequences through departure. VAT belongs to the LLP registration, so a member leaving does not normally transfer a share of the VAT number.

Personal guarantees and ongoing liability

Leaving the LLP does not automatically cancel a personal guarantee, lease obligation or separate indemnity. Obtain written releases from lenders, landlords or suppliers where possible. The member may remain responsible for matters arising from work performed before departure, subject to the agreement, insurance and general law.

Client, employee and data handover

Agree who controls client files, confidential information, intellectual property, email accounts and personal data. Notify clients or employees where appropriate without making misleading statements. Professional firms should follow their regulator’s rules on client choice, records and run-off cover.

Example

A member retires on 30 September 2026. The LLP files LL TM01 by 14 October, prepares a profit allocation to the exit date, agrees staged repayment of the capital account and obtains a written release from the bank guarantee. The member then reports their final partnership income and any separate disposal on the appropriate tax return.

Use the official Companies House LLP forms and review the LLP default provisions. If a replacement is joining, see our guide to adding an LLP member.

Frequently asked questions

Can a member resign immediately?

Only if the agreement or circumstances permit it. Otherwise, reasonable or contractual notice may be required.

Does Companies House remove financial liability?

No. It records the membership change; guarantees, settlements and previous obligations require separate attention.

Can the LLP continue after a member leaves?

Yes, if enough members remain. If only one is left, the six-month single-member liability rule must be addressed urgently.

This guide is general information. Departures often require tailored legal, accounting and tax advice.