UK LLP Main Advantages for Non-UK Residents

UK LLP Formation

Non UK residents as well as non-domiciles are potentially best positioned to minimise UK tax through the use of a UK Limited Liability Partnership. It is a “pass through” entity from a UK tax perspective; therefore income is attributed to individual members personally. UK LLP with foreign partners (i.e. non UK residents) and no profits derived from the trade in the UK will not be subject to UK personal income tax on the profits. This is the main UK LLP advantage over the UK Limited Company.

LLP in UK were introduced in 2001 by UK LLP Act, is a cross between two legal entities: a partnership and a company. A UK LLP provides members (partners) with benefits of limiting their personal assets from potential claims. It was originally used by professional firms of accountants and lawyers, but now has found their way into international trading, investment and property investment activities.

The United Kingdom is a well respected financial jurisdiction. Conducting business through a UK Limited Liability Partnership (UK LLP) or UK Limited Company will help you to establish your business in the UK as well as in the EU, not to mention that it will give you more respectability than trading through an offshore company. It does not come as a surprise that many non UK companies and non UK resident individuals opt for a UK LLP formation or at least include it in their business structure. The UK has advantageous double taxation treaties with over 100 countries within the EU and worldwide, which you can take advantage of once registering a UK LLP or UK limited company.

UK LLP Taxation: Specific Advantages of for Non-Domiciles and Non-Residents

UK LLP individual members only pay personal income tax. Personal income tax is only payable on the profits derived from trading in the UK. It is possible, that UK LLPs with foreign partners (i.e. two members being offshore companies or non resident individuals) will not be subject to any Corporation Tax or personal income tax in the UK but the following criteria have to be met:

  1. The offshore companies Directors or individual members of a UK Limited Liability Partnership have to be non-UK residents.
  2. Control of a LLP in UK (i.e. decision making, management meetings, contract signings, etc) should be exercised overseas
  3. UK LLP with foreign partners (UK non-resident members) will only pay UK personal income tax on the profits gained from trade within the UK. The members may also take advantage of more than 100 double taxation treaties signed by the UK.

UK Limited Liability Partnership (LLP): Other Advantages

  • Foreign nationals or offshore companies can be members during UK LLP registration
  • A UK LLP formation requires a minimum of two members. It is possible to have two offshore companies as members or even one individual member (yourself) and another offshore company (where you are a beneficial owner)
  • There is no Corporation Tax to pay if members are not companies
  • UK Partnership Agreements are not available to the general public and there is no requirement to hold and maintain records of meetings
  • There is no capital contribution requirement or ‘capital maintenance’ rules for a UK LLP incorporation, which means there is no restriction on extracting profits
  • Personal assets of UK LLP members are protected the same as a limited company in UK
  • LLP is a British legal entity and respected worldwide. Conducting business through a British company is far easier than with an offshore company.

Non UK residents and non-domiciles are best positioned to minimise UK tax through use of offshore companies with the UK LLP or UK Company as part of the business structure. UK LLP formation is straight forward. UK LLP incorporation will give you advantage of double tax treaties. LLP UK ongoing annual maintenance costs are low.