A limited partnership (LP) is a partnership with two kinds of partner: at least one general partner who's liable for all the firm's debts, and at least one limited partner whose liability stops at the capital they put in. It's created under the Limited Partnerships Act 1907 and registered at Companies House on form LP5, which costs £124 as of October 2026.
People mix up an LP with an LLP all the time, and the difference matters. In an LP, somebody still carries unlimited liability. The limited partners are protected, but only while they stay out of running the business. Here's how the structure works, what the registration asks for, and the rules that catch people out.
The two kinds of partner, side by side
| General partner | Limited partner | |
|---|---|---|
| How many | One or more | One or more |
| Liability | All debts and obligations of the firm | Up to the capital or property they contributed |
| Can manage the business | Yes | No, and can't bind the firm |
| Can inspect the books | Yes | Yes, and can advise the partners |
| Can take capital back early | Depends on the partnership agreement | No, not while the partnership continues |
| Can be a company | Yes | Yes, a legal entity can be a limited partner |
Those rows come straight from sections 4 and 6 of the 1907 Act. The capital point is worth reading twice: under section 4(3), a limited partner who draws out or receives back any part of their contribution while the partnership continues becomes liable for the firm's debts up to the amount they took out.
The management trap
This is the part most guides skip. Section 6(1) says a limited partner shall not take part in the management of the partnership business. If they do, they're liable for all the debts and obligations incurred while they were managing, as though they were a general partner.
So the protection isn't a fixed shield. It depends on behaviour. A limited partner can look at the accounts, examine the state and prospects of the business and give advice, but the moment they start making the calls, they've stepped outside the protection for that period. If you're bringing in a silent investor, put the line between advising and managing in writing in your partnership agreement.
One more protection runs the other way: the death or bankruptcy of a limited partner doesn't dissolve the partnership. That makes an LP a steadier home for an investor's stake than an ordinary partnership.
What goes on the LP5 application
Section 8A of the Act lists what the application has to contain. In plain terms:
- The firm name, which must end with "limited partnership" or "LP" (a Welsh ending is allowed if the principal place of business is in Wales).
- The intended registered office address and a registered email address.
- The general nature of the partnership business.
- The details of each general partner and each limited partner.
- The amount of each limited partner's capital contribution, and whether it's paid in cash or another form.
- The principal place of business and the term of the partnership, if there is one.
- A statement that none of the proposed general partners is disqualified under the directors disqualification legislation.
Every proposed partner has to sign or authenticate it. GOV.UK says Companies House will reject the application if the correct fee isn't included, and a partnership whose principal place of business is in Scotland uses form LP5(s) instead. A private fund limited partnership has its own form, LP7.
The 7-day change rule
Registration isn't the end of the paperwork. Under section 9, when certain things change, the firm must send Companies House a signed statement within seven days. The changes include the firm name, the principal place of business, the partners or a partner's name, and the liability of a partner, for example a limited partner becoming a general one. Seven days is tight, so build it into whatever you do when a partner joins or leaves.
Trading alone is the simpler alternative, covered in what a sole trader is.
When an LP makes sense
- You have someone running the business who's willing to carry unlimited liability, usually through a company acting as general partner.
- You want passive investors who'll put in capital and stay hands off.
- You want the investor's stake to survive their death or bankruptcy without ending the partnership.
If everyone wants to be involved and protected, an LP is the wrong tool. Compare it with the routes in my guide to sole trader vs limited company, and if you're still deciding how to split roles, my piece on building an effective business partnership covers the conversations to have first. If you're in the US, this page isn't your rulebook: LPs there are set up under each state's own law.
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My verdict
An LP is a good fit for one specific job: an active partner who carries the risk plus investors who don't. Get the management line in writing, never hand capital back to a limited partner early, and diarise the seven-day notice. Do those three things and the structure does what it says.
If you want a company rather than a partnership, my private limited company guide explains how a Ltd works.
Frequently asked questions
What is a limited partnership in the UK?
It's a partnership registered under the Limited Partnerships Act 1907 with at least one general partner, who's liable for all the firm's debts, and at least one limited partner, whose liability is limited to the capital they contributed.
How much does it cost to register a limited partnership?
GOV.UK says it costs £124 to register a limited partnership on form LP5, as of October 2026, and the application is rejected without the correct fee.
Can a limited partner be involved in running the business?
Not without risk. Section 6 of the Act says a limited partner who takes part in management is liable for the debts incurred while they're managing, as though they were a general partner.
What's the difference between an LP and an LLP?
In an LP at least one general partner has unlimited liability. The limited partners are protected only while they stay out of management.
Does a limited partnership name have to end in LP?
Yes. Section 8B says the name must end with "limited partnership" or "LP", with a Welsh alternative allowed if the principal place of business is in Wales.
Can a company be a limited partner?
Yes. Section 4 of the 1907 Act says a legal entity may be a limited partner.
How quickly must changes to an LP be reported?
Within seven days. Section 9 requires a signed statement to Companies House when changes such as the firm name, principal place of business or the partners take place.
