Nearly every UK venture fund sits on the same chassis: a limited partnership, with a general partner entity that runs it and limited partners who commit the capital. The structure question a first-time manager actually faces is one layer down. Whether the partnership takes the Private Fund Limited Partnership designation, where the management company and the carry vehicle sit, and whether the partnership is English or Scottish all get settled at formation, and none of them is easy to change afterwards.
This is the structure chapter of The Carry's going-pro series, notes from the UK cap table for the angel becoming a manager. It stays at fund level. Deal-by-deal SPVs are a different instrument, compared in investing direct vs through an SPV, and what has happened to the taxation of carried interest has a page of its own.
The wrapper gets chosen early and unwound almost never.
Why do UK venture funds use a GP/LP limited partnership?
Because the limited partnership gives a fund the split of roles it needs, in a wrapper the whole industry already understands. The vehicle is registered under the Limited Partnerships Act 1907, and the division of labour is in the name. A general partner runs the fund, makes the investment decisions and carries unlimited liability for the partnership's obligations, which is why the general partner is almost always a company rather than a person. The limited partners commit the capital, stay out of management and in return keep their liability limited.
Two other properties do the quiet work. The limited partnership agreement is a private contract, so the fund's term, its investment policy, the fee and the distribution waterfall can all be written to fit. And the partnership is transparent: it holds the portfolio without adding a taxed layer of its own between the investors and their returns. Institutional LPs have seen this shape their whole careers, which matters more to a first-time manager than any structural nicety.
What is a Private Fund Limited Partnership (PFLP)?
A Private Fund Limited Partnership is a limited partnership that has designated under a regime introduced on 6 April 2017 by the Legislative Reform (Private Fund Limited Partnerships) Order 2017, SI 2017/514, which amended the 1907 Act for private investment funds. New UK venture funds routinely designate on registration.
The designation does two things a manager cares about. First, it gives limited partners a statutory white list of actions they can take without losing limited liability. Under the unamended Act, an investor who strayed into management risked being treated as a general partner; the white list replaces that uncertainty with a list, and practitioner notes from CMS and from Ashfords read it as covering the ordinary oversight an investor in a private fund expects to exercise. Second, it removes the requirement for a limited partner to contribute capital on admission, which the old regime imposed. Both English and Scottish limited partnerships can take the designation. The table above sets the two regimes side by side.
Where do the management company and the carry vehicle sit?
Outside the fund partnership. The partnership holds the investments, and around it sits a small cluster of entities, each with one job.
The general partner is usually a limited company formed for the fund, since unlimited liability lands there. The management company, often a separate company or LLP, employs the team, receives the management fee and holds whatever regulatory permission the operation needs; the authorisation question has its own page in this series. The carry vehicle is the third piece: a separate entity, commonly itself a limited partnership, through which the executives hold their carried interest in the fund. Keeping the carry in its own vehicle separates the team's upside from the management company's balance sheet, and copes with people joining and leaving across the life of a fund.
What this page will not do is price any of it. From 6 April 2026 carried interest sits within the Income Tax framework; the treatment is set out in HMRC's Investment Funds Manual on GOV.UK and taken apart in carried interest is now taxed as income. Here, the carry vehicle is structure and nothing more.
What is the difference between an English and a Scottish limited partnership?
Legal personality. A Scottish limited partnership is a legal person separate from its partners; an English limited partnership is not, and acts through its general partner, which holds the fund's assets and signs its contracts on the partnership's behalf.
The practical consequences are narrower than the doctrinal difference suggests. English limited partnerships remain the usual choice for the fund vehicle itself, and the market documents them without difficulty. Where the Scottish form earns its place is one level up. Because a Scottish partnership can hold property and enter contracts in its own name, it can itself be a partner in another partnership, which is why Scottish limited partnerships appear so often as carry vehicles; the practitioner notes from CMS and Ashfords on the 2017 reforms both make the point. The designation regime does not separate the two forms: under SI 2017/514, English and Scottish limited partnerships alike can be PFLPs. The choice is about personality and practice, and it is one of the places counsel earns the fee.
When is specialist fund counsel non-optional?
Before anything is signed, and realistically before anything is drawn. Structure is one of the two places a first-time manager pays properly for specialist advice, the other being regulation, and the two interact at every joint. The limited partnership agreement is a long, negotiated contract. The entity stack has to line up with the manager's regulatory position, with what LPs will accept in side letters, and with how the carry is held. Get a clause wrong at formation and it binds for the life of the fund, because limited partnerships are built to be hard to unwind. The wider build, from track record to LPs, is mapped in how to start a micro VC fund in the UK.
A closing note on what this page is. It is general information about how UK venture funds are structured, not financial or legal advice, and not a recommendation of any structure. Registration requirements and the underlying rules sit on GOV.UK; confirm the current position there, and take advice from an FCA-regulated adviser and specialist fund counsel before structuring anything or committing capital.
Frequently asked questions
What is the GP/LP structure in a venture fund?
GP and LP stand for general partner and limited partner, the two roles in a limited partnership. The general partner runs the fund, makes the investment decisions and carries unlimited liability for its obligations, which is why it is almost always a company. The limited partners are the investors: they commit capital, stay out of management and keep their liability limited. Nearly every UK venture fund is built this way under the Limited Partnerships Act 1907.
What did the PFLP designation change in 2017?
The Private Fund Limited Partnership regime took effect on 6 April 2017 under the Legislative Reform (Private Fund Limited Partnerships) Order 2017, SI 2017/514, which amended the Limited Partnerships Act 1907. It gave limited partners in designated funds a statutory white list of actions they can take without losing limited liability, and it removed the requirement to contribute capital on admission. Both English and Scottish limited partnerships can designate.
Can a Scottish limited partnership be a PFLP?
Yes. The 2017 regime applies to English and Scottish limited partnerships alike. The difference between the two forms is legal personality: a Scottish limited partnership is a legal person separate from its partners and can hold assets and enter contracts in its own name, while an English limited partnership acts through its general partner. That separate personality is one reason Scottish partnerships are often used as carry vehicles.
Is the carry vehicle part of the fund partnership?
No. The carry vehicle is a separate entity, commonly itself a limited partnership, through which the fund's executives hold their carried interest. Keeping it separate from the fund and the management company keeps the team's economics in one place as people join and leave. How the carry is taxed is a different question: from 6 April 2026 carried interest sits within the Income Tax framework, and the current treatment is set out in HMRC guidance on GOV.UK.
Do you need a lawyer to set up a UK venture fund?
In practice, yes. The partnership agreement, the entity stack, the carry vehicle and the regulatory position all interact, and errors at formation are expensive to unwind, so structure choices need specialist fund counsel. This page is general information, not financial or legal advice, and not a recommendation of any structure; confirm the current rules on GOV.UK and take advice from an FCA-regulated adviser before committing capital.