Last updated Sep 21, 2026 and written by Daniel Tuckey

Limited by Guarantee: A Quick Overview

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A Limited by Guarantee company swaps shareholders for guarantors, who each promise a set amount toward the company's debts if it closes, rather than owning shares. Since there's nothing to hold shares in, there's no way to pay dividends either, which is exactly why charities and non-profits tend to use this structure.

Key Takeaways

  • Guarantors replace shareholders, and there are no shares or dividends involved.
  • The same annual filings apply as any limited company: accounts, a Confirmation Statement, and a Corporation Tax return.
  • Paying directors or members requires a specific clause in the Articles of Association.
  • VAT registration follows the same rules as a standard limited company, including the current £90,000 threshold.

What Actually Makes This Structure Different?

Liability. In a standard limited company, owners only cover the value of their shares if things go wrong. In a Limited by Guarantee company, guarantors instead commit to a fixed amount toward the company's debts. No shares means no dividends, which is why the structure suits organisations built around a purpose rather than profit distribution, Network Rail being a well-known example.

Paying directors or members isn't automatic here either. It only works if the Articles of Association specifically allow it, unlike a standard limited company where paying directors through dividends is the norm.

For the fuller breakdown, including naming rules, annual filing detail, and how guarantors can leave the company, our main guide to Limited by Guarantee companies covers it all.

FAQs

What's the main difference between a Limited by Guarantee company and a standard one?

Guarantors instead of shareholders, and no shares to distribute profit through.

Can a Limited by Guarantee company pay its directors?

Only if its Articles of Association specifically allow it.

Does a Limited by Guarantee company register for VAT the same way as any business?

Yes, the same threshold and rules apply, currently £90,000 a year.

This article is for general information only and does not constitute legal or tax advice. For the fuller picture, see our main guide to Limited by Guarantee companies.