Business structures · 2026
Quick answer
Partners are taxed personally on their share of profits and, in a general partnership, are jointly liable for debts. A limited company is a separate legal entity that pays Corporation Tax, with shareholders taxed only on what they extract. For property investors, companies deduct mortgage interest in full, while individual partners receive a 20% tax credit. — LimitedCompany.Accountants, ICAEW-regulated accountants for UK limited companies.
Partnership vs limited company in 2026: liability, tax on profits, profit extraction, filing, LLPs, and how the choice differs for property investors.
Written and reviewed by Waqas Sagar Member of ICAEW, Fellow of ACCA, Fellow of AAT, a double graduate and entrepreneur at heart, helping startups grow and serving thousands of businesses nationwide with an excellent team. Published by LimitedCompany.Accountants, 12 London Road, Morden, London SM4 5BQ. Reviewed 21 October 2026 against 2026/27 UK rates and current Companies House and HMRC guidance.
Content updated 21 October 2026. Official references are listed below.
Whether you search partnership vs limited company or limited company vs partnership, the decision turns on liability, how profits are used and the number of owners. An LLP sits between the two.
Liability and legal status
Tax on profits
Profit extraction
Filing and privacy
Property investors
A general partnership is not a separate legal entity in England and Wales; partners are jointly liable for its debts. An LLP and a limited company are separate legal entities, so owners' liability is normally limited to what they invest, subject to personal guarantees.
Partners and LLP members pay Income Tax and Class 4 NIC on their profit shares as earned. A company pays Corporation Tax at 19% to 25% and owners pay tax on salary or dividends drawn. If most profit is spent personally, the difference may be small; if profit is retained, the company often wins.
Individual landlords, including partners, cannot deduct residential mortgage interest and receive a 20% credit. Companies deduct interest when calculating taxable profit. Announced property income rates of 22%, 42% and 47% for individuals from April 2027 add to the comparison.
Transferring an existing portfolio to a company can trigger CGT and SDLT. Incorporation relief requires a genuine business, and special SDLT rules apply to partnerships, but anti-avoidance rules apply. Get advice before restructuring.
Rates, thresholds and dates reflect the UK position at the content update date, including measures announced for future tax years. Check current GOV.UK guidance, or ask us, before relying on them.
General partnerships file a partnership return and each partner files Self Assessment; no public accounts. LLPs and companies file accounts and confirmation statements at Companies House, and companies also file CT600s.
Primary references
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Frequently asked
It depends on profit levels and how much you draw. Companies often benefit when profits are retained.
In a general partnership, yes, jointly. LLP members and company shareholders usually have limited liability.
Companies deduct mortgage interest fully, which often suits leveraged new purchases. Existing portfolios need CGT and SDLT modelling.
Yes. The partners transfer the business to a new company; incorporation relief may defer gains where conditions are met.
An LLP is registered, has limited liability and files public accounts, but is generally taxed like a partnership.
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Deadlines, thresholds and filing rules change. GOV.UK and Companies House publish the current statutory position; advice should then be applied to your company’s circumstances.
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