Scottish Limited Partnership

Main uses & advantages

Scotland is part of the United Kingdom, a leading global financial and business centre and an important jurisdiction for international tax planning. The UK is known internationally as a jurisdiction with a standard level of taxation. However, Scottish law provides the opportunity for registration and operation of companies with a zero tax rate by means of a Limited Partnership (LP).

The Scottish Limited Partnership (SLP) is governed by the Limited Partnerships Act 1907 and for registration purposes, must have its principal place of business in Scotland. Unlike LP’s registered under the 1907 Act in England & Wales, a Scottish LP has a separate legal personality meaning that it can amongst other things, contract and hold assets in its own name.

Scottish Limited Partnership (SLP)

A Scottish limited partnership (SLP) is a unique vehicle. Although it has been around for over a century, the SLP has been used in recent times for modern business purposes such as private equity and property investment fund structures. This article looks at the advantages of the SLP which make it so attractive to fund managers, promoters and investors, both domestic and overseas.


The main advantages of the Scottish Limited Partnership:
There are no taxes in the UK providing that the partnership does not trade in the UK and partners are not residents of the UK. Partners are taxed in the jurisdiction of their location.
No requirements to submit financial statements in the Register of Enterprises.
No requirements to submit a tax declaration in the Register of Enterprises.
Internationally recognized jurisdiction with an excellent reputation.
High confidentiality.
The legal requirement that the limited partners are not entitled to participate in the management of the company, makes Scottish LP an ideal mean for investment structures with a large number of partners, where management and control are assigned to the general partner or manager appointed by the general partner.

Uses of a Scottish Limited Partnership

A Scottish LP is an ideal solution for those who prefer to operate a company incorporated in the EU and to have a totally tax-free facility at the same time.

  • Funds structures.
  • SLPs can be used flexibly in funds structures.
  • SLP as the main fund vehicle.
  • The SLP can be a main funds vehicle because:
    • It can hold assets in its own name;
    • There can be multiple but passive investors (the limited partners);
    • Only one person manages the investments and business of the partnership (the general partner);
    • Tax transparency means that each partner is taxed on the profits it receives, the amount of which will be determined by the limited partnership agreement.

SLP as a participant

Because it has a separate legal personality, the SLP can also be used in funds or other structures which require ‘persons’ to be members. A common example of this is the use of the SLP as a carried interest partner. A ‘carried interest partner‘ facilitates the filtering of a percentage of the profits of the main fund to the fund manager. An example of a structure is in this diagram.

The above structure comprises the main funds’ vehicle which is a limited partnership (and could be an SLP). The SLP is itself made one of the limited partners in the main funds’ vehicle. This is only possible because the SLP has a separate legal personality: limited partnerships registered in other jurisdictions could not fulfil this function. The fund manager is one of the limited partners of the SLP. The profits from the main funds’ vehicle filter through to the SLP and from there to the fund manager (how and when this happens is determined by the limited partnership agreements). As the SLP is tax transparent, the fund manager is taxed directly on the profits it receives.

General information


Scottish LP companies require a minimum of 2 Partners, who may be natural persons or corporate bodies from any legal jurisdiction.

Register of Partners

Each Scottish LP company must file a register of its Partners with the Register of Enterprises of Scotland.


The capital of the company is divided between its Partners.


There is no statutory requirement for a Company Secretary to be appointed.

Authorised share capital

Standard authorised capital = GBP 100.

Company names

The name of a Scottish LP company must end with the words Limited Partnership or the suffix “LP”.

Company names containing restricted words such as “Bank”, “Insurance”, “Trust”, “Assurance”, “Building Society”, “England”, “British”, “European”, “Irish”, “National”, etc. will not be permitted unless an appropriate national operating license or special permit has been obtained by the company. Also the words “International”, “Holding”, “Group” are subject to individual acceptance by Companies House.

Beneficial ownership information

Information with regard to ultimate beneficial ownership must be disclosed to the Registered Agent of the company and is held by the agent on a confidential basis.

Filing of annual return

There is no requirement to file an Annual Return.

Filing of financial statements

Every Scottish LP must keep appropriate accounting records, and prepare Financial Statements annually. Relevant Tax Declaration must be submitted to Her Majesty Revenue & Customs annually.

Tax treaties

LP companies that do not carry on any commercial operations in the UK; do not derive any income from UK sources, and are managed and controlled by Members who are not UK residents, are not regarded as residents for tax purposes in UK, and therefore are not entitled to take advantage of international Double Tax treaties concluded by the UK with other countries.

Taxation of partners in an SLP

UK tax resident partners are subject to UK tax on their share of worldwide partnership profits. Those partners who are not UK residents, however, will only pay UK tax if the partnership is carrying on a trade in the UK, and only on their share of profits arising in the UK. Whether or not partnership activities amount to trade can be a difficult question, and care must be taken to ensure that the SLP will not inadvertently act in such a way as to be deemed to be carrying on a trade in the UK. Provided the partnership is not trading in the UK, however, no UK tax will be payable by non-UK resident partners.

Tax planning and mitigation

Because it has separate legal personality and tax transparency, it is worth considering using the SLP in the context of tax structuring. SLPs are popular vehicles for use in a range of tax mitigation schemes that may be set up to reduce the liability of the partners to the UK and/or foreign tax on income and chargeable gains or stamp duty land tax (known as SDLT). These structures can be rather complicated to set up but, where the requisite conditions are met, offer significant potential tax savings.

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