Doing business in The United Kingdom

How quickly can I set up a business?

A UK business can generally be established within a relatively short period of time, although the timeframe will depend on the type of business structure chosen.

If you are setting up a private limited company, the company must be incorporated at Companies House. An online application will usually be processed within 24 hours, although additional checks can result in a longer processing time. Once incorporated, the company will receive a certificate of incorporation confirming that it legally exists.

Limited Liability Partnerships (LLPs) must also be registered with Companies House.

Companies House has introduced identity verification requirements for company directors and other relevant individuals. These requirements should be factored into the incorporation process, particularly where directors or owners are based overseas.

Opening a UK bank account is a separate process and can take considerably longer than incorporating a company. Banks and other financial institutions will undertake their own anti-money laundering and Know Your Customer (KYC) checks.

If an overseas company establishes a physical place of business or branch in the UK, it will normally need to register a UK establishment with Companies House. Registration requires details of the overseas company and, depending on the circumstances, copies of constitutional documents and accounts. The registration must generally be submitted within one month of opening the UK establishment.

A sole trader or conventional partnership can normally begin trading without Companies House incorporation. However, the business and its owners may have registration and reporting obligations with HM Revenue & Customs (HMRC), including registration for Self Assessment where required.

What is the minimum investment needed?

A UK private company limited by shares can be established with a very small amount of share capital. There is no general statutory requirement to invest a substantial minimum amount.

In practice, the appropriate level of capital will depend upon the commercial requirements of the business. Banks, investors, regulators, suppliers or other stakeholders may expect the company to have a greater level of funding or capital.

There is generally no statutory minimum capital requirement for an ordinary sole trader or conventional partnership. However, lenders may require security or personal guarantees when providing finance.

Businesses operating in regulated sectors may be subject to separate minimum capital or funding requirements.

How can I raise finance?

Most overseas businesses establishing operations in the UK will find it advantageous to have access to a UK bank account. Although this is not generally a legal requirement simply to trade in the UK, it is often important for practical commercial reasons.

Opening an account can take time, particularly for overseas-owned businesses, because banks and financial institutions are required to carry out anti-money laundering, identity and Know Your Customer checks.

UK businesses have access to a wide range of funding options. The appropriate form of finance will depend on the size, financial position and requirements of the business. Options can include:

Working Capital – facilities such as overdrafts, revolving credit and invoice finance can be used to support the day-to-day working capital requirements of a business. Invoice finance may allow funding to be advanced against eligible trade receivables.

Asset Finance – hire purchase, leasing and other asset-based facilities can enable businesses to acquire vehicles, plant and equipment while spreading the cost over an agreed period.

Commercial Mortgages – finance may be available to businesses purchasing commercial premises. The amount available and repayment term will depend on the property, the borrower and the lender’s criteria.

Trade Finance – a range of facilities can support domestic and international trade, including letters of credit, guarantees and other forms of import and export finance.

Equity Finance – businesses may also raise capital from shareholders, private investors, venture capital or private equity depending on their size, sector and stage of development.

The availability, cost and terms of finance will depend on the circumstances of the business and prevailing market conditions.

What are the legal requirements for setting up my business?

Businesses entering the UK market should select an appropriate legal and trading structure.

Common structures include:

• sole trader
• conventional partnership
• Limited Partnership
• Limited Liability Partnership (LLP)
• private limited company
• public limited company
• UK establishment or branch of an overseas company

Different forms of partnership are available, including conventional partnerships, Limited Partnerships, Scottish Limited Partnerships and LLPs.

Companies may be limited by shares or guarantee, and in certain circumstances may be unlimited. Public limited companies are subject to additional legal and capital requirements.

Businesses can also operate through joint ventures, corporate groups and combinations of different structures.

The appropriate structure will depend on factors including ownership, funding, commercial risk, tax, regulation, reporting requirements and plans for future growth or exit.

What structure should I consider?

An overseas business looking to establish operations in the UK will commonly consider whether to establish a UK subsidiary or operate through a UK branch or establishment of the overseas company.

There can be significant legal, commercial, accounting and tax differences between these approaches.

A subsidiary is a separate legal entity and can help ring-fence the activities and liabilities of the UK operation. A branch is part of the overseas company rather than a separate legal entity.

Businesses should consider factors such as commercial relationships, financing, profit repatriation, regulatory requirements, taxation, transfer pricing, legal liability and future plans for the business.

The tax treatment will also depend upon the interaction between UK legislation and the legislation of the overseas jurisdiction, together with any applicable double taxation agreement.

Professional advice should therefore be obtained before selecting the structure.

What advice can you give me in regards to payroll and taxation requirements?

The UK has a well-established corporate and international tax regime and offers a number of incentives relevant to businesses investing in the UK.

Corporation Tax

• UK resident companies are generally subject to UK Corporation Tax on their worldwide profits, subject to applicable exemptions and reliefs. Overseas companies can be subject to UK Corporation Tax on profits attributable to a UK permanent establishment and in certain other circumstances.

• The main rate of Corporation Tax is currently 25%. A 19% small profits rate can apply to companies with lower levels of profit, with marginal relief potentially available between the small profits and main rate limits. The relevant profit thresholds can be reduced where a company has associated companies or a short accounting period.

• Current Corporation Tax rates and thresholds can be found on the UK Government website: www.gov.uk/corporation-tax-rates

• The UK provides significant tax relief for qualifying capital expenditure through the capital allowances regime. Depending on the nature of the expenditure and the circumstances of the business, this can include immediate tax relief for qualifying investment.

• Tax incentives are also available for qualifying research and development expenditure. The precise relief available depends on the applicable R&D regime and the circumstances of the claimant.

• The Patent Box can provide an effective 10% Corporation Tax rate on qualifying profits attributable to qualifying patents and certain other intellectual property rights.

• A Company Tax Return is normally required for each accounting period and is generally due within 12 months of the end of that accounting period.

• Corporation Tax is normally payable nine months and one day after the end of the accounting period. Large and very large companies can be required to pay Corporation Tax by instalments at earlier dates.

International matters

• The UK has an extensive network of double taxation agreements.

• The UK can be an attractive location for international holding companies. Most dividends received by UK companies are exempt from Corporation Tax, subject to the relevant conditions.

• The Substantial Shareholdings Exemption can exempt qualifying gains made by companies on disposals of substantial shareholdings where the relevant statutory conditions are satisfied.

• The UK does not generally impose withholding tax on dividends paid by UK companies.

• UK withholding tax can apply to certain interest and royalty payments. Domestic exemptions or an applicable double taxation agreement may reduce or eliminate the tax depending on the circumstances.

• The UK transfer pricing regime is broadly based on the OECD arm’s length principle. Exemptions can apply to certain small and medium-sized enterprises, although there are exceptions and businesses undertaking cross-border transactions with related parties should consider the rules carefully.

Value Added Tax (VAT)

• The UK operates a Value Added Tax (VAT) system. The standard rate of VAT is currently 20%, although reduced and zero rates apply to certain goods and services.

• UK established businesses are generally required to register for VAT when their taxable turnover exceeds the applicable VAT registration threshold. As the threshold can change, the current amount can be found on the UK Government website: www.gov.uk/vat-registration

• Different registration rules can apply to businesses which are not established in the UK. In particular, an overseas business making taxable supplies in the UK may be required to register for VAT irrespective of the normal registration threshold.

• VAT registered businesses generally charge and account for VAT on their taxable supplies and can normally recover VAT incurred on eligible business expenditure, subject to the VAT recovery rules.

• VAT returns are generally submitted electronically, most commonly every three months, although different arrangements can apply. VAT registered businesses are generally required to comply with Making Tax Digital requirements.

Customs duties

• Goods imported into the UK can be subject to customs duty and import VAT.

• Following the UK’s departure from the European Union, Great Britain operates its own customs tariff. Different arrangements can apply to movements of goods involving Northern Ireland, Great Britain and the EU.

• The amount of customs duty payable depends on factors including the classification, value and origin of the goods.

• Preferential or zero rates of customs duty may be available under the UK’s trade agreements where the relevant conditions, including rules of origin requirements, are satisfied.

• Businesses importing or exporting goods should consider their customs registration, reporting and compliance requirements before commencing trade.

Employee taxes

• The UK’s social security tax is known as National Insurance. Employees can be liable to employee National Insurance contributions (NICs) on their earnings, while employers can have a separate employer NIC liability.

• Employers are responsible for deducting employee NICs and PAYE Income Tax through payroll and paying these amounts, together with any employer NIC liability, to HM Revenue & Customs (HMRC).

• National Insurance rates and thresholds can change, so current employer and employee rates can be found on the UK Government website: www.gov.uk/national-insurance-rates-letters

• Some employers may also qualify for the Employment Allowance, which can reduce their employer National Insurance liability. Eligibility conditions and the amount of the allowance can change and current information can be found on the UK Government website: www.gov.uk/claim-employment-allowance

• Where a business brings employees to the UK from overseas, special social security rules can apply. Depending on the employee’s circumstances, the country concerned and any applicable international agreement, an employee may be able to remain within their home country’s social security system for a period.

• Internationally mobile employees can create additional PAYE, National Insurance and reporting obligations, so advice should be sought before employees begin working in the UK.

Taxes on individuals

• UK Income Tax is charged at graduated rates, with higher rates applying as an individual’s taxable income increases. A tax-free Personal Allowance may also be available, although this can be reduced for individuals with higher incomes.

• England, Wales and Northern Ireland generally use the same main Income Tax rates and bands for employment and other non-savings, non-dividend income. Scotland has separate rates and bands for certain types of income.

• Different rates apply to dividend income and certain other types of income.

• Income Tax rates, allowances and bands can change between tax years. Current rates can be found on the UK Government website: www.gov.uk/income-tax-rates

• Capital Gains Tax (CGT) can arise when an individual disposes of an asset at a gain. The rate payable depends on the individual’s circumstances and the nature of the gain.

• Certain business disposals can qualify for Business Asset Disposal Relief, which provides a preferential rate of Capital Gains Tax where the relevant conditions are satisfied. Other CGT reliefs may also be available depending on the circumstances.

• Current Capital Gains Tax rates and allowances can be found on the UK Government website: www.gov.uk/capital-gains-tax/rates

• UK tax residence is determined under the Statutory Residence Test. UK resident individuals are generally subject to UK tax on their worldwide income and gains, subject to applicable exemptions and reliefs and the terms of any relevant double taxation agreement.

• The previous remittance basis regime for UK resident non-domiciled individuals was abolished from 6 April 2025 and replaced with a residence-based regime.

• A four-year Foreign Income and Gains (FIG) regime is available to qualifying new UK residents. Broadly, an individual who becomes UK resident after a sufficiently long period of non-UK residence may be able to claim relief in respect of eligible foreign income and gains arising during their first four tax years of UK residence.

The UK tax treatment of businesses and internationally mobile individuals can be complex and will depend on their particular circumstances. Professional advice should therefore be obtained before establishing a business or moving employees to the UK