Partnership Law UK: Rules, Risks, and Real-World Examples for Business Owners

When you start a business with one or more people in the UK, you’re entering a partnership, a legal relationship where two or more people share ownership, profits, and responsibilities of a business. Also known as business partnership, it’s one of the most common structures for small businesses outside of limited companies. Unlike a sole trader, where you’re personally responsible for everything, a partnership splits duties—but not always risks. Under UK partnership law, each partner is jointly and individually liable for the actions of the others. That means if your partner takes on a £50,000 debt without your knowledge, you’re on the hook for it too.

This is why a written partnership agreement, a formal contract that outlines how partners share profits, make decisions, and handle exits or disputes. Also known as deed of partnership, it isn’t just smart—it’s essential. The default rules under the Partnership Act 1890 are outdated. They say profits are split equally, even if one partner works 60 hours a week and the other just shows up for meetings. They say no partner can be paid a salary. They say the partnership ends if one partner dies or leaves. These aren’t just technicalities—they’re legal traps waiting to break your business.

UK partnership law doesn’t require you to register your partnership with Companies House, but it does require you to register for Self Assessment and pay income tax and National Insurance on your share of profits. You also need to keep proper records. If you’re selling products, you’ll need to follow consumer rights laws. If you’re hiring staff, employment law kicks in—even if you’re just two people. And if you’re working with clients, your liability exposure doesn’t shrink just because you’re not a limited company. A single lawsuit or unpaid invoice can wipe out your personal savings, your home, even your car.

That’s why many UK businesses that start as partnerships end up switching to limited companies. It’s not about prestige—it’s about protection. But if you’re staying with a partnership, knowing the law isn’t optional. You need to understand how liability in partnerships, the legal responsibility each partner carries for the debts and obligations of the business. Also known as unlimited liability, it works in practice. You need to know what happens if someone quits, gets sick, or dies. You need to know how to add a new partner without accidentally dissolving the whole thing. You need to know how to settle disputes without going to court.

The posts below give you real, practical answers—not theory. You’ll find guides on how to draft a partnership agreement that actually works, how to protect yourself from a partner’s mistakes, and how to transition from partnership to limited company when the time comes. You’ll see how other UK businesses have handled disagreements over profits, how to handle a partner leaving without destroying the business, and what happens if one of you gets sued. No fluff. No jargon. Just what you need to run your business without getting blindsided by the law.