A Private Limited Company (Ltd) is the most common and widely used business structure in the United Kingdom. It provides limited liability protection, meaning the personal assets of the owners are protected, and the company operates as a separate legal entity. No minimum start-up capital is required, and a UK limited company may carry out any lawful commercial activity that does not require a special licence.

An Ltd must be limited by shares and requires at least one shareholder, who may be an individual or a corporate body from any jurisdiction. The company must also have at least one director, who must be a natural person and may be of any nationality. It is possible for the same person to act as both shareholder and director. There is no statutory requirement to appoint a company secretary.

Where there are multiple founders, the share capital must be divided into nominal shares, with ownership allocated in whole percentages that together total 100 per cent. A UK registered office address is mandatory, and information relating to directors, shareholders, and beneficial owners must be disclosed to the registered agent.

A UK limited company is governed by the Companies Act 2006, and its main constitutional document is the Articles of Association, which may follow the standard Model Articles. Financial statements must be filed annually with Companies House, and corporation tax returns must be submitted to HMRC. UK companies are generally taxed on worldwide income, and VAT registration applies where relevant.

A Limited Liability Partnership (LLP) combines elements of a traditional partnership with the benefit of limited liability. It is a separate legal entity responsible for its own debts and obligations and is commonly used by professional firms and international business structures.

An LLP requires a minimum of two partners, known as members, who may be individuals or corporate entities from any jurisdiction. At least two designated members are responsible for ensuring compliance with statutory obligations. There is no requirement to appoint a director or company secretary, and management responsibilities may be shared between members or delegated to a managing partner.

Members’ liability is limited to the amount they agree to contribute to the partnership. An LLP may carry out any lawful commercial activity in the UK. From a tax perspective, LLPs are generally tax transparent. Where all members are non-UK residents and the LLP does not derive income from the UK, it may be exempt from UK corporation tax, although individual members remain liable for tax on their share of profits. Annual filings and partnership tax returns must still be submitted to HMRC where applicable.

The principal legislation governing LLPs is the Limited Liability Partnerships Act 2000, together with relevant provisions of the Companies Act 2006.

(England & Wales and Scotland)

A Limited Partnership (LP) is often used for investment and international structures and operates on a tax-transparent basis. An LP must have at least two partners: a general partner, who manages the business and has unlimited liability, and a limited partner, whose liability is restricted to their capital contribution.

There is an important distinction between English and Scottish limited partnerships. Scottish LPs have separate legal personality, while English LPs do not. However, English LPs may still operate under their own name, enter into contracts, and open bank accounts. LPs are formed by entering into a partnership agreement, which defines the rights and responsibilities of each partner.

Limited partnerships may carry out commercial activities in the UK. The partnership itself does not pay tax; instead, partners are taxed individually in accordance with their share of profits and their country of residence. Where an LP has no UK-source income and is controlled by non-UK residents, it may be exempt from UK corporation tax, although zero tax returns may still be required. Such LPs are generally not regarded as UK tax resident and therefore cannot benefit from the UK’s double taxation treaties.

LPs are governed primarily by the Limited Partnerships Act 1907 and the Partnership Act 1890. While English LPs are generally exempt from filing annual accounts, they must still maintain proper accounting records, and each partner remains responsible for their own tax compliance.