Pay 0% Business Taxes with a UK LLP

Summary

This video explores the UK LLP as a tax-efficient structure for businesses. It's a partnership with at least two members, each having limited liability. UK LLPs are pass-through entities, meaning they aren't taxed directly; instead, partners report profits on their personal tax returns. If all partners are non-resident and no UK business is conducted, there's no UK tax liability. The presenter also discusses combining UK LLP with personal tax residency in a zero-tax country for maximum benefit. They provide practical examples, registration processes, and maintenance requirements, including annual filings and fees, and suggest using fintech services for banking due to potential challenges non-residents face with traditional banks.

Takeaways

• 😀 The UK LLP is a partnership structure that offers limited liability to all partners, unlike LPs which can have a mix of limited and general partners.
• 🏛️ There are no residency requirements for partners in a UK LLP, and it can conduct business in the UK without restrictions, but this may create a tax burden.
• 💼 A UK LLP is a pass-through entity for tax purposes, meaning it's not taxable itself; instead, partners are taxed on their share of profits in their country of residence.
• 🌍 Non-resident partners of a UK LLP are only liable for tax on their share of the LLP's UK profits, not its worldwide profits.
• 💡 The video suggests combining a UK LLP with personal tax residency to create a zero percent tax structure legally.
• 🔒 As of 2022, self-registration of a UK LLP is no longer possible; it must be done through a service, authorized software, or by post.
• 📈 The LLP must file yearly documents with HMRC, and non-compliance can result in penalties for the LLP and its owners.
• 💳 Non-residents often face challenges opening bank accounts for a UK LLP, so fintech services like Wise or Revolut are recommended.
• 🌐 The video encourages viewers to consider a UK LLP as part of a broader strategy for a zero percent tax lifestyle, including becoming a resident of a zero tax country.
• 🔗 For further assistance and resources, including banking options and application strategies, the speaker offers help through his team and additional videos.

Q & A

What is a UK LLP and how does it differ from an LP or LTD?

A UK LLP is a partnership structure that must have at least two partners, with all partners having limited liability. Unlike an LP, which can have a mix of limited and general partners, all partners in an LLP are limited. An LLP is different from an LTD, which is a limited company with shareholders and directors, and is a separate legal entity.

Can a UK LLP conduct business in the UK without restrictions?

Yes, a UK LLP can conduct business in the UK without any restrictions. However, conducting business in the UK may create a tax burden for the partners.

How does taxation work for a UK LLP and its partners?

A UK LLP is a pass-through entity for tax purposes, meaning it is not taxable in itself. Instead, the partners must include their share of the profits in their tax returns in their country of residence. UK resident partners are liable for tax on their share of the LLP's worldwide profits, while non-resident partners are liable only on their share of the LLP's UK profits.

What are the implications of selling products or services to UK customers from a UK LLP?

Selling products or services to UK customers from a UK LLP does not create a tax liability. However, it might create a UK VAT liability, depending on the nature of the products or services.

What are the registration requirements for a UK LLP as of 2022?

As of 2022, it is no longer possible to self-register a UK LLP. Registration must be done through a registration service, authorized commercial software, or by filing the form via post. The process usually takes no more than 24-48 hours.

What are the maintenance requirements for a UK LLP?

HMRC requires that a UK LLP files a yearly partnership return before the end of October or January if filed electronically for the fiscal year ended in April. There is also a small annual fee to renew and keep the LLP active.

What is the role of a registered address for a UK LLP?

A UK LLP must maintain a registered address in the UK or Wales that is equipped to receive official notices. The address cannot be located in Scotland, Northern Ireland, or abroad.

What are the banking options for a UK LLP, especially for non-residents?

Non-residents often struggle to open bank accounts for a UK LLP. It is recommended to use fintech services like Wise or Revolut, which offer a range of services and are compatible with payment processors like Stripe and PayPal.

How can a UK LLP be used to achieve a zero percent tax structure?

A UK LLP can be part of a zero percent tax structure when combined with personal tax residency in a zero percent tax country. This allows individuals to legally minimize their tax liabilities.

What additional resources and support are offered by the speaker's team for setting up a UK LLP?

The speaker's team offers assistance with setting up a UK LLP, including help with banking, applying to banks, and understanding the best structure for individual circumstances. They also provide guidance on the best practices for maintaining a UK LLP.