How to Use a UK LLP to Trade Tax Free

Zero Tax and Credibility of a UK Partnership with Limited Liability

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A UK Limited Liability Partnership can be a useful too for international entrepreneurs.

 

When you set up UK LLP you have all the advantages of a limited liability company.

 

The assets of the partners can’t be touched by creditors of the UK LLP, like a limited company.

 

Where it gets interesting is how UK LLPs are taxed. The LLP,  as an independent legal entity, is not taxed.

 

The limited partners themselves are taxed but only if they are UK residents or trading in the UK.

 

Therefore residents of more tax friendly jurisdictions can set up a UK LLP, trade and invest internationally and have no tax liabilities.

For example, if you are running an international consulting business and have a tax residence in Panama you could trade through a UK LLP and not be subject to UK taxes.

 

Some entrepreneurs find it much easier to set up payment processing with a UK LLP than with companies incorporated in obvious tax havens.

 

It’s much easier to set up a merchant account with the UK based entity than it is with a company from Belize or the BVI.

Even UK residents can take advantage of the tax benefits of a UK LLP.

 

A UK resident is taxed on his worldwide income. However a UK LLP can have offshore entities as its limited partners.

 

Provided the UK LLP doesn’t make any profits in the UK there will be no tax liability there as the limited partners (the offshore companies) are not UK residents.

You can set up a UK LLP easily and inexpensively. The annual running costs should be less than £500 per year to maintain a UK address.

 

Bank accounts can be set up with the major UK banks including HSBC, Lloyds and Barclays.

If privacy is important it’s possible to use nominees as partners.

Merchant accounts can be set up directly with UK banks or with providers like Stripe and Worldpay.

The UK LLP setup works well for entrepreneurs and global nomads who are conducting day to day business rather than those who simply want to hold assets in an offshore structure.

I’d recommend that you use the UK LLP to produce invoices and collect payments.

 

After you receive the payments they can be wired safely outside the UK to an offshore bank in a tax haven.

If you need to hold substantial assets in the UK LLP one of your limited partners could hold security over those assets.

 

The security can easily be put in place and filed with Companies House in the UK.

If you’d like help to set up a UK LLP as part of your global tax planning and asset protection strategy get in touch with us today.