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LLP Agreement UK: What to Include & Why It Matters

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Written by Brad Askew Solicitor (non-practising)
Brad is on the roll of solicitors of England & Wales but does not hold a practising certificate and does not provide legal advice.
Updated June 2026 · England & Wales
A Limited Liability Partnership sits in an interesting middle ground between a traditional partnership and a limited company. You get the flexibility of running things the way partners want, alongside the protection of a separate legal entity that shields personal assets from business debts. But none of that flexibility works in your favour without a proper LLP agreement in place. Without one, the default statutory rules apply, and those rules rarely reflect how members actually want to share profits, make decisions, or handle someone leaving the business. This guide walks through what an LLP agreement covers, why each section matters, and the practical questions members should be thinking about before putting anything in writing. If something here doesn't quite match your situation, a short call with an experienced legal adviser can help you make sense of it.

What this document is

An LLP agreement is the private contract between the members of a Limited Liability Partnership that governs how the business operates internally. Unlike the LLP's registration at Companies House, which is a matter of public record, the agreement itself is typically kept confidential between the members.

It covers the commercial and operational arrangements: who contributes capital, how profits and losses are divided, who has authority to make which decisions, what happens when a member joins or leaves, and how disagreements get resolved. The Limited Liability Partnerships Act 2000 and the Limited Liability Partnerships Regulations 2001 provide default rules that kick in where members haven't agreed otherwise, but those defaults are basic.

For example, the defaults assume equal profit shares regardless of contribution, which almost never reflects what members actually intended. A well-drafted agreement replaces those gaps with terms that suit the specific business, the people involved, and the way the firm plans to grow.

How to use this document

  1. Decide who the members are and their roles. Work out who will be a member of the LLP and whether any will be 'designated members'. Designated members have extra responsibilities, including filing accounts and confirmation statements with Companies House, and at least two are required (or the LLP must have all members treated as designated).
  2. Agree the commercial terms between members. Before drafting, the members need to settle the key questions: capital contributions, profit and loss shares, drawings, decision-making thresholds, and what happens on retirement, death, or expulsion. These conversations are often the hardest part, but getting them right early saves significant pain later.
  3. Register the LLP with Companies House. File form LL IN01 to incorporate the LLP. You'll need a registered office address, the names and addresses of members, and the names of the designated members. There is a filing fee, check gov.uk for the current amount. Incorporation usually takes a few working days online.
  4. Put the LLP agreement in writing and have all members sign. The agreement should be signed by every member and kept with the LLP's records. It doesn't get filed publicly, which is one of the privacy advantages of an LLP compared to the articles of association of a limited company.
  5. Open a bank account and set up tax registration. Open a business bank account in the LLP's name and register the LLP for self-assessment with HMRC. Each individual member is also taxed personally on their share of profits, so members will need their own self-assessment arrangements in place.

Common questions

If you're dealing with this kind of situation, speak to an experienced legal adviser who can walk you through it — from £149.

Common questions

Q Is an LLP agreement legally required?
No, an LLP can exist without a written agreement, and the default rules in the Limited Liability Partnerships Act 2000 and the 2001 Regulations will apply. However, relying on the defaults is rarely a good idea. They assume equal profit shares, equal management rights, and don't cover common scenarios like a member wanting to leave. Most LLPs benefit from a tailored agreement that reflects what the members actually want.
Q How are LLP members taxed?
LLPs are usually tax transparent, which means the LLP itself doesn't pay corporation tax. Instead, each member is taxed on their share of the LLP's profits through self-assessment, similar to a traditional partnership. Members are generally treated as self-employed for tax and National Insurance purposes, although HMRC's 'salaried member' rules can reclassify some members as employees for tax. The rules are detailed, so check your position carefully.
Q What's the difference between an LLP and a limited company?
Both offer limited liability, but they differ in structure and tax treatment. A limited company has shareholders, directors, and pays corporation tax on its profits, with shareholders taxed separately on dividends. An LLP has members who share profits directly and are taxed personally on their share. LLPs tend to offer more internal flexibility, which is why professional practices often choose them.
Q Can an LLP have corporate members?
Yes, a member of an LLP can be a company as well as an individual. This is sometimes used in tax planning or group structures. However, at least two designated members must exist, and there are reporting obligations where corporate members are involved. If you're considering this, it's worth getting guidance tailored to what you describe before incorporating.
Q What happens if a member wants to leave the LLP?
This is one of the most important things an LLP agreement should address. Without clear terms, the default position under the regulations can lead to unexpected outcomes, including the possibility that the LLP has to be wound up. A good agreement sets out notice periods, how the departing member's capital is returned, what happens to their profit share, and any restrictions on competing with the LLP afterwards.
Q Does the LLP agreement need to be filed at Companies House?
No. The agreement itself is private and stays between the members. What does get filed publicly is the incorporation information, the registered office, the names of members, annual confirmation statements, and the LLP's accounts. This privacy around internal arrangements is one reason LLPs appeal to professional firms who don't want commercial terms on the public record.
Q Can we change the LLP agreement later?
Yes, the members can amend the agreement at any time, as long as the changes are made in line with whatever variation procedure the agreement itself sets out. Typically this requires the consent of all members, or a specified majority, depending on what was originally agreed. Any changes should be recorded in writing and signed by the members.
If you're dealing with this kind of situation, speak to an experienced legal adviser who can walk you through it — from £149.

Sources

This guide is based on primary UK law and official guidance.

Brad Askew, Solicitor (non-practising)

Written & reviewed by

Brad Askew Solicitor (non-practising)

Brad is on the roll of solicitors of England & Wales but does not hold a practising certificate and does not provide legal advice. LegalDocuments.co.uk is not a law firm and does not provide regulated legal advice.

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Legal disclaimer
This article is for general information only. It is a tool to help you find your way — not legal advice, and not a substitute for speaking to a qualified adviser about your situation.