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UK Ltd or LLP what's the best and how to pay less tax?

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erni

Mentor Group Gold
I want to setup a UK LTD but also read a little about the LLP - as I understand LLP was used to be anonymous back in time but isn't that any longer because of the new rules where everyone owning more than 5% shares have to be registerd!

Now I wonder, how easy is it to manage a UK company from abroad? What I'm lookin at to get answered is, company registration and VAT is clear, but how much tax does a foreign owned UK LTD pay in taxes and is it better to setup a UK LLP?

Any help would be great!
 

CaptK

Nominee Company Bank Account Real Estate Passport
Mentor Group Gold
UK LTD is tax resident on its own so therefore liable for tax. There are exceptions if it's a subsidiary but that becomes complicated.

LLP can be used as a tax free entity so long as the directors are not UK residents and no income is derived from the UK.
 

Perry8

Active Member
A UK Ltd pays normal corporate tax. The tax rate in the UK is currently 19%

A UK LLP is a tax transparent entity, so it is not taxed as such in the UK. Instead, the partners are taxed on their share of the income/surplus according to the partnership agreement. If the partners are foreigners they are, as a general rule - but not always, not taxed in the UK but rather in their country of residence.

You are correct that it is not very suitable if privacy is important, because an LLP has to file its UBOs to the Companies House.

The interesting part with the LLP is that in many ways it is a hybrid between a company and a partnership, so it opens up a couple of great tax planning options. The simple version is that many countries regards a LLP as a company/corporation tax wise since it has limited liability. If you combine this with structuring your LLP in such a way that it resembles a corporation in the UK, local tax authorities in some countries can - under certain conditions - accept that payments from the LLP to a (company) partner is classefied as dividends.
 

CaLViN

Active Member
LTD pays taxes at a rate of %19.
LLP pays no taxes with foreign shareholder companies located in banana islands BUT then you will not be able to open a proper bank/emi account for an LLP which means it is useless.
Noone wants to work with shady companies anymore..
 

Perry8

Active Member
LTD pays taxes at a rate of %19.
LLP pays no taxes with foreign shareholder companies located in banana islands BUT then you will not be able to open a proper bank/emi account for an LLP which means it is useless.
Noone wants to work with shady companies anymore..
Agree. But, that is, of course, not how you structure it. The secret is in the partnership agreement and which countries the partner companies are in. An LLP setup is not good for privacy though, so if that is a major concern use some other jurisdiction than the UK.
 

Fajosst

New member
Ok, a UK LLP with an offshore company as a member is not a good idea to get a bank...but what about a UK LLP with two members (normal people) from countries outside the EU? Wouldn't it be easier to get a bank account while avoiding taxes?
 

Admin

Forum Moderator
Staff member
Elite Member
Wouldn't it be easier to get a bank account while avoiding taxes?
Interesting questions, let's get some input from the experts, I don't believe you can avoid taxes if you insert yourself as members, you will be taxed in your home country at some point!
 

Perry8

Active Member
Can you name some of those countries?
Denmark, Sweden, Norway, Germany, to name some high taxed countries. But, note that this do not mean that payments will always be classefied as dividends to partners in these countries. It will depend on the situation.
 

Perry8

Active Member
Ok, a UK LLP with an offshore company as a member is not a good idea to get a bank...but what about a UK LLP with two members (normal people) from countries outside the EU? Wouldn't it be easier to get a bank account while avoiding taxes?
In general, as long as the LLP does not have a UK resident partner (person or if the partner is a company then a UK resident director of that company), you will struggle with a UK bank account.

A UK LLP with offshore companies as partners will get an EMI account in Europe. The same applies if the partners are individuals based ouside of the EU - unless you are based in a restricted country.

I don't believe you can avoid taxes if you insert yourself as members, you will be taxed in your home country at some point!
True. An individual member will be taxed in their country of residency. But, if you live in a country with a territorial tax system like Thailand, Panama, Costa Rica to name a few, you will not be taxed.
 

Fajosst

New member
Interesting questions, let's get some input from the experts, I don't believe you can avoid taxes if you insert yourself as members, you will be taxed in your home country at some point!
Yes, but particularly in my case I do not pay taxes (legally) in my country. brazilians who do not live in Brazil and inform this situation to the IRS do not pay taxes to Brazil. And I am currently not resident in any country, I live traveling and depending on tourist visas...

About bank account I believe Swissquote, Dukascopy and some digital banks/EMI like Revolut (maybe not this one) or TW can consider an LLP application with non-resident members. Traditional banks really should not accept me.
 

Skipper

New member
LTD pays taxes at a rate of %19.
LLP pays no taxes with foreign shareholder companies located in banana islands BUT then you will not be able to open a proper bank/emi account for an LLP which means it is useless.
Noone wants to work with shady companies anymore..
You can get a TW account with an LLP, right? I believe that's still the case.
 

Skipper

New member
Who cares about TW ? You can get a TW account even with fake dark documents so it is not the case here.
Most people care lol. For third-world foreigners like myself not raking in big bucks (several thousand a month) and running a US LLC or UK LLP, TW and Mercury are basically our only two choices depending on where you decide to incorporate. Nothing wrong with that either, plenty of people on here from what I've read that make high five or six figure amounts every month through either of them. And I don't know where you read you can open a TW account with fake documents, because you can't. Their process is strict now, to the point where they verify you with ITIN or SSN if it's a US LLC (or even personal IDs and what not if they have a suspicion). Even if you somehow manage to open one, you'll get shut down rather quick if you're not legit.
 
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