Types of Business Structures in the UK

Sole trader: simplest; profits taxed at Income Tax rates with Class 4 NIC; unlimited personal liability; Self Assessment only.

General partnership: two or more people trading together; partners taxed on their profit shares; jointly liable for debts; partnership return plus personal returns.

LLP: separate legal entity registered at Companies House; members usually taxed like partners; limited liability; public accounts.

Limited company: separate legal entity; Corporation Tax at 19% to 25%; directors and shareholders taxed on salary and dividends; public accounts and confirmation statements.

CIC: a limited company with a community purpose and asset lock; taxed like other companies; files a CIC34 report each year.

Sole traders and partners pay Income Tax and NIC on all profits as they arise, whether drawn or not. A company pays Corporation Tax on profit, and owners pay personal tax only on what they extract, which can help where profits are reinvested. From 6 April 2026, dividend tax rates are 10.75%, 35.75% and 39.35%.

Companies and LLPs appear on the public register with directors, members and PSCs. Since 18 November 2025, directors and PSCs need identity verification with Companies House. Accounts are filed publicly, although micro-entities file limited information.

Starting small or testing an idea: often sole trader. Two or more owners in a professional practice: often LLP. Higher profits, reinvestment, external investment or contracts requiring a company: often limited company. Social purpose with trading income: CIC or charity.

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.