Limited company vs LLP: tax, admin and filing compared

In short: A limited company pays Corporation Tax. An individual LLP member normally pays Income Tax and Class 4 National Insurance on their share; a corporate member pays Corporation Tax (HMRC manual PM131450). Taxley prepares the Company Tax Return for £39.95, then files the accounts at Companies House once the return is paid and the accounts are finished.

Take the 30-second check to see whether Taxley fits your company, or see the price for your company.

Key facts (checked on 21 October 2026)

What is the legal difference between a limited company and an LLP?

A limited company and an LLP are each separate from their owners, and the tax differs. One director can also be the only shareholder (GOV.UK: set up a limited company). An LLP needs two or more members, and at least two designated members (GOV.UK: set up an LLP).

Owners of a company limited by shares meet business debts only up to the value of their investment. GOV.UK gives a £1 share as an example of a low value that limits what shareholders pay if the company closes. One director, aged 16 or over, can own every share, and a private company does not need a secretary. In general law an LLP is a body corporate, and for tax it is normally a partnership. Members pay tax on their profit share, as in an ordinary partnership, and they are not personally liable for debts the business cannot pay. A member can be a person or a company. Ask a solicitor where a personal guarantee is in point (GOV.UK: set up a limited company; HMRC manual PM131450).

Who pays the tax on the profits?

The company pays Corporation Tax on its profits. From 1 April 2026 that is 19% on £50,000 or less, 25% on more than £250,000, and 25% less marginal relief in between. An LLP is normally transparent, so each member is taxed on that member's share (GOV.UK: Corporation Tax rates; HMRC manual PM131450).

The 2026 fraction is 3/200. With no exempt distributions, relief is 3/200 of the gap between the upper limit and the profits, and HMRC describes that band as 26.5% while 19% and 25% apply. A short period, or associated companies, reduces both limits. An LLP with a view to profit is taxed as a partnership. Each member is taxed on the share as trade profits, which may be Income Tax or Corporation Tax. Where all three salaried member conditions are met, PAYE and Class 1 National Insurance apply without changing that member's chargeable profits. The marginal relief guide sets out the formula (GOV.UK: Corporation Tax allowances; HMRC manual CTM03925).

How do the owners take the profits out?

A company may pay a salary and, where profits allow, a dividend. The salary is deducted only if the company's purpose meets the wholly and exclusively rule. A dividend is not a business cost. LLP members are taxed on the profit share (GOV.UK: taking money out; HMRC manual BIM38200).

From 6 April 2026 to 5 April 2027 the personal allowance and the primary threshold are both £12,570. Category A employee National Insurance is 0% at or below that threshold, and the same rates apply to directors. A £12,570 salary with no other income has no Income Tax and no employee National Insurance. Employer National Insurance is 15% above £5,000, and the company must run PAYE. A dividend cannot exceed profits available from this year and earlier years. Directors declare it, each payment needs a voucher, and the company pays no Corporation Tax on the dividend. The shareholder may pay Income Tax above the £500 allowance. The salary or dividends guide compares those company routes. Drawings of an expected LLP profit share are not disguised salary (GOV.UK: employer rates 2026 to 2027; HMRC manual PM255100).

What must a limited company and an LLP file?

After the first accounts, later company accounts go to Companies House within nine months of the year end. Corporation Tax is due nine months and one day after the period, and the Company Tax Return within 12 months. LLP designated members send accounts and a confirmation statement (GOV.UK: company accounts).

First company accounts are due 21 months after registration. The Company Tax Return is due 12 months after the period, including a loss or a nil bill, and a partnership does not send one. A company's confirmation statement is due at least once every 12 months, within 14 days of the review period, at £50 online or £110 on paper. Those pounds are the company fee. Missing it can mean a fine of up to £5,000, and the company may be struck off. Designated members keep the accounting records. The LLP files a separate partnership return (SA800), and each individual member reports the allocated share on a personal return. For 2025/26, an individual member's online return and tax are due at 11:59pm on 31 January 2027 (HMRC manual PM138000; GOV.UK: Self Assessment deadlines).

When is an LLP member taxed as an employee?

An individual member is taxed as an employee only if all three conditions are met: 80% of the reward is disguised salary, there is no significant influence over the whole business, and capital is under 25% of that disguised salary. One or two conditions are not enough (HMRC manual PM254000; HMRC manual PM258100).

Disguised salary is fixed, varies without reference to the LLP's overall profits or losses, or is not in practice affected by those profits. A share that moves with overall profits is not disguised salary, and drawings on account of an expected profit share are not disguised salary. The test looks forward. Influence over the whole business means Condition B is not met, while influence over only one part can still meet it. Condition C is a contribution below 25% of the disguised salary expected for the tax year. This example uses an equal share of overall profit as the whole reward, so Condition A is not met. Take advice if any part of the reward is fixed (HMRC manual PM255100; HMRC manual PM256100).

What names go on the public register?

Directors' names and service addresses are public. A home used as an LLP's registered office is public too. A company confirmation statement checks shareholders and people with significant control, and an LLP must report changes to its members and to those people (GOV.UK: set up a limited company; GOV.UK: set up an LLP).

A company's confirmation statement checks the registered office, the directors, the secretary, where the records are kept, the share capital and shareholders, the SIC code and the people with significant control. More than 25% of the shares or voting rights is the threshold for a person with significant control. The email address on the statement is not published. A director can ask for a home address to be removed from the register. That removal is stated for directors, and this comparison does not apply it to LLP members. A home used as the LLP's registered office stays on the public register. An LLP should have an agreement covering profit shares, decisions, and how members join or leave. This guide does not say whether that agreement appears on the register (GOV.UK: set up an LLP; GOV.UK: confirmation statement).

What tax is due on £80,000 of profit for two owners in 2026/27?

On the 2026/27 rates, and Corporation Tax for the year from 1 April 2026, two owners taking all of an £80,000 profit pay £15,418.16 through a company and £14,263.60 through an LLP. They keep £64,581.84 and £65,736.40. The £1,154.56 gap is this example only.

Two individuals share equally, with no other income, on the bands for England, Wales and Northern Ireland. Scottish bands differ and are not used. The company period is 12 months from 1 April 2026, with no associated companies and no exempt distributions. Employment Allowance of up to £10,500 is assumed to cover employer National Insurance of £1,135.50 a director (£2,271 in total): both directors are paid above £5,000, less than half the work is in the public sector, there is one payroll, and no connected company has already claimed. If the salaries are not wholly and exclusively for the trade, the profit is higher. The profit left after Corporation Tax is paid as a 2026/27 dividend, and the LLP reward is only the equal share. Income under £100,000 means the allowance is not tapered (GOV.UK: Income Tax rates; GOV.UK: Employment Allowance).

Marginal relief is 3/200 × (£250,000 − £54,860) = £2,927.10, so Corporation Tax is £13,715.00 − £2,927.10 = £10,787.90. Dividend tax on £21,536.05 at 10.75% is £2,315.125375, rounded to £2,315.13 a person and £4,630.26 for both. Rounding the two sums once would give £4,630.25. That penny is this example's rounding. LLP Income Tax is 20% of £27,430 = £5,486, and Class 4 is 6% of £27,430 = £1,645.80. Class 2 cash is nil because £40,000 is over £7,105 and Class 2 is treated as paid. With no dividend, Corporation Tax of £10,787.90 is still due and £44,072.10 stays in the company. Other income, Scottish bands, associates, one director or a company member change the result (GOV.UK: Corporation Tax allowances; GOV.UK: self-employed National Insurance).

When does a limited company tend to suit, and when an LLP?

A company can suit one owner, or owners who leave profit in the company and take dividends later. An LLP can suit two or more members taxed on their shares as profits arise. The £1,154.56 gap calculated above is not a reason to pick one form.

One person can be the only director and the only shareholder. An LLP needs two designated members, so one person cannot form one. Corporation Tax is due whether or not a dividend follows. Dividend tax starts when the £500 allowance and the personal allowance do not cover the dividend. LLP Income Tax and Class 4 follow the profit share. The LLP route uses form SA800 and each member's Self Assessment. A sole trader compared with a company is a separate choice, and that owner is responsible for the debts. Take advice where the people, other income or a guarantee differ (GOV.UK: set up an LLP).

Can Taxley file for a limited company or an LLP?

Taxley (taxley.co.uk), UK online software that prepares and files the Company Tax Return (CT600) with HMRC and the annual accounts with Companies House, is for limited companies. An LLP's partnership return and an individual member's Self Assessment are outside it. A micro-entity return costs £39.95.

If the number entered is an LLP's, Taxley explains that an LLP files a partnership return (SA800), not a Company Tax Return, and does not charge. Taxley does not prepare that partnership return, an individual member's Self Assessment, or a VAT return. Taxley does not file the confirmation statement. Taxley does not give tax advice and does not pay the Corporation Tax. For a limited company, Taxley files the accounts at Companies House once the return is paid and the accounts are finished, at no extra cost. A small-company return costs £129, and a dormant nil return costs £9.50. Take the 30-second check to see whether Taxley fits your company, or see the price for your company. The return, the accounts and the confirmation statement are separate jobs (guide to the three filings; GOV.UK: Company Tax Return).

Frequently asked questions

Can one person form an LLP?

No. An LLP is set up with two or more members, and at least two must be designated members at all times. A member can be a person or a company. A limited company can have one director who is also the only shareholder. Take advice on the particular facts before choosing a form.

Do LLP members pay Income Tax on profit left in the LLP?

An individual member normally pays Income Tax on that member's share; a corporate member pays Corporation Tax. Cash left in the LLP does not defer that member-level charge. HMRC's partnership manual confirms both tax routes. Drawings of an expected profit share are not disguised salary. Take advice if any reward is fixed.

Can a company deduct a dividend from its Corporation Tax?

No. A dividend is not a business cost. A salary is deducted only where the company's purpose meets the wholly and exclusively rule in section 54 of the Corporation Tax Act 2009. Income Tax can apply above the £500 dividend allowance for 2026/27. The dividend needs available profits.

Does Employment Allowance cover two directors on £12,570?

The allowance is up to £10,500, and employer National Insurance is 15% above £5,000. Two salaries of £12,570 produce £2,271 before the allowance. Two directors paid above that threshold can have the allowance cover it if the other eligibility assumptions in the example hold. A single-director company has an extra condition.

When is the online Self Assessment deadline for the year ended 5 April 2026?

For the year ended 5 April 2026, an individual member's online return and tax are due by 11:59pm on 31 January 2027. The paper deadline was 31 October 2026. A second payment on account can fall due on 31 July. This guide does not calculate those payments.

General information, not personalised tax or accounting advice. Rates and rules checked on 21 October 2026.