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A Guide to Setting Up a Business in the UK as a Non-UK Resident
The UK’s visa options attract business owners and entrepreneurs from around the world through its doors. While it may seem more difficult to start a business in the UK if you’re a foreign national, with a good idea and a well-executed plan, it can be possible.
To start a business in the UK as a non-UK resident, you need to consider the following steps:
- Think about your visa position
- Apply for the correct visa
- Consider your business’s legal structure
- Incorporate your business
- Register for tax
Download our guide to Setting Up a Business in the UK here.
Why the United Kingdom?
The United Kingdom is a recognised leader in the world of business, innovation and technology:
- The second most entrepreneurial country in the world, according to CEOWORLD Magazine’s Entrepreneurship Index 2019.
- Ranked as the sixth-largest economy in the world and the second-largest in Europe in terms of GDP by the IMF.
- Global companies such as Tata Group, Infosys, TCS, Huawei Technologies and HCL have come to UK shores.
- A rich and diverse market, including pharmaceuticals, IT, fashion, manufacturing, primary food production, space technologies, aerospace and automotive engineering.
- A world-class education provider with renowned institutions such as Oxford, Cambridge, Eton and Harrow.
- A trading nation that embraces the modern international principles of fair and open trade on a level and equal basis.
- The number one gateway to Europe, with access possible without a visa post-Brexit for British nationals through an ETIAS travel authorisation.
- A provider of a high standard of living, education and recreation, with a publicly-funded healthcare system that is free to all.
Starting a Business in the UK
Business Visitor Visas
The business visitor visa is for business visitors, prospective entrepreneurs and visitors who are carrying out permitted paid engagements. Permitted work includes:
- Attending meetings or interviews
- Arranging deals or signing contracts
- Undertaking fact-finding missions
- Receiving a brief about a UK customer’s requirements
A business visitor visa allows for a six-month stay in the UK, with options of a fast-track priority service. It is a popular option for applicants wishing to plan and research their prospective projects and ventures in the UK.
Sole Representatives of Overseas Firms
An overseas parent company can send one of their senior employees to the UK as their sole representative to establish their subsidiary or register a UK branch. The company must not already have a branch, subsidiary or another representative in the UK.
The Innovator visa replaces the Tier 1 Entrepreneur Visa to provide an exciting opportunity to set up a business in the UK with little or no initial investment. The crux of the application is to have a sound innovative idea that is viable and scalable, and has been approved by a Home Office endorsing body.
For this visa route, you are required to:
- Demonstrate that you have an innovative business idea
- Be an experienced business person in possession of £50,000
- Have an understanding of the English language at CEFR level B2
- Have sufficient maintenance funds to cover the costs of living in the UK
This visa will enable you to launch your business idea in the UK, while providing a route to settlement for you and your family after three years.
The start-up visa is an attractive category for the young, dynamic innovators who are looking to step into the world of business for the very first time. The route is similar to the Innovator category; however, there is no initial investment required.
This visa provides a route to settlement for you and your family after five years.
Legal Structures for Businesses in the UK
There are a variety of business types in the UK, and you will need to choose the option that most closely fits your company’s structure.
If you want to work as a self-employed individual in the UK or run a business on your own, you can become a sole trader. As a sole trader, you will keep all of your business profits, but are personally liable for all business debts. You will be required to make your own arrangements to pay income tax and National Insurance.
For businesses set up by two or more individuals with responsibility shared equally between partners, you will need to set up a general partnership. Profits will be shared equally, with each partner responsible for paying tax on their share, along with the liability for debts. Most small businesses follow this legal structure.
Similar to a general partnership, a limited partnership will have at least one partner who runs the business, making them personally liable for any business debts. Any other partner(s) will provide a purely financial input and only be liable for the amount they have contributed.
Limited Liability Partnership (LLP)
An LLP structure means that no partners will be liable for debts that a business cannot pay. This type of partnership requires a written LLP agreement and must be registered with Companies House, the UK’s registrar of companies.
Private Limited Company (Ltd)
Businesses that are private limited companies are separate legal entities from the people that run it. Limited companies are incorporated through registration at Companies House and require at least one director and one shareholder. Shares in the company cannot be traded publicly.
Public Limited Company (PLC)
A PLC differs from limited companies as their shares can be traded publicly. You need to have a minimum share capital of £50,000 with at least 25% paid prior to starting up.
This type of business structure is not very common in the UK. It involves shareholders having joint unlimited liability for business debts, meaning their personal assets can be used in the event of business assets not meeting debts.
Social enterprises are structured similarly to limited companies but rather than the profits being distributed among shareholders, investments are made to charitable, social or community objectives.
This is an unregistered, unincorporated form of non-profit organisation that can include voluntary groups, small community groups and sports clubs.
An offshore company is registered, established or incorporated outside of your country of residency. Offshore incorporation is a straightforward process in popular offshore financial centres and tax havens around the world.
If you are required to register your new business with Companies House, there are a number of steps to follow as part of the registration process:
- Register the company name
You must create a unique name for your business. For sole traders, you can just use your own name. Use the Company Name Availability Checker to check if your name is available.
- Register the UK address
Your company must have a registered office address in the UK. This will be your official company address and must be maintained throughout the lifetime of your firm; however, it can be changed as long as it stays in the same region of the UK.
- Submit a company director(s)
A limited company must have at least one director. A director must be 16 years old or over and have a registered UK address.
- Submit your shareholder(s)
There must also be at least one shareholder - the person acting as director can also be a shareholder. You must then issue the value of the shares to the shareholders.
- Complete the Memorandum of Association
This is a legal statement signed by all initial shareholders agreeing to form the company and articles of association, which are written rules about running the business.
All UK businesses must register with HMRC for tax purposes and are responsible for submitting their own tax returns. The UK tax year runs from 6th April, with tax returns submitted along with any outstanding tax to pay by the following 31st January.
Sole traders and those in partnerships pay taxes on business profits, while other companies must register for Corporation Tax. The rate of Corporation Tax is 20% on profits, excluding any allowances and relief.
UK businesses must also register for VAT if their annual turnover is more than £83,000. In addition, capital gains tax may need to be paid if business assets are sold at a profit.
Talk to Us
Setting up your own business can be a time-consuming and difficult process, and it is vital that you complete all the steps carefully and correctly to ensure you are successful.
Our dedicated corporate immigration team has assisted individuals and a wide variety of organisations by providing a complete holistic solution to setting up a business in the UK or making an investment.