Setting up a business in the United Kingdom

The UK tax system also offers a range of benefits for businesses including extensive double taxation treaties, exemptions from withholding tax, reliefs on dividend taxation, and a competitive corporation tax rate.

With access to a world-class talent pool and highly skilled workforce, combined with a progressive financial regulator and easy access to financing, the UK presents a compelling proposition for international companies seeking to set up operations.

Establishing a Business in the UK

When deciding to establish or register a business in the UK, there are various legal structures available for consideration. The most common options include:

Private Company Limited by Shares (Ltd)

A Private Limited Company is a separate legal entity.. Shareholder liability is limited and restricted to the share capital invested.

Public Limited Company (PLC)

Offers the ability to sell shares in the public domain while being a separate legal entity.

Ordinary Partnership

Requires two individuals to manage the entity, with partners being jointly liable to financial obligations and debt – this is not a separate legal entity.

Limited Liability Partnership (LLP)

Considered an amalgamation of a Private Limited Company and an Ordinary Partnership, an LLP acts as a separate legal entity to partners, with limited partner liability.

UK Establishment (“Branch”)

An establishment (or branch) of an overseas business. Parent Company Financial Statements are required for UK filings and will be in the public domain – this is not a separate legal entity.

Capital Requirements and Director/Officer Requirements

Private Company Limited by Shares (Ltd)

• Minimum capital requirement of GBP £1
• A company is controlled by its shareholders under the articles of association and any shareholders’ agreement that exists. The shareholders then delegate responsibility for the day to day management to the directors
• Minimum of one director and one shareholder
• Not obligated to have a secretary (but recommended to appoint a service provider to reduce responsibilities of director(s))

Public Limited Company (PLC)

• Minimum capital requirement of GBP £50,000 or more
• At least 25% of which must have been paid up before the Company can begin trading
• Minimum of two directors and a company secretary needed

Limited Liability Partnerships (LLP)

• No minimum capital requirements | Does not issue shares
• LLPs blend the position of directors and shareholders so that the partners have a share in the business and are responsible for running the business in accordance with the partnership agreement
• Minimum of two members, including, minimum two designated members needed to perform compliance duties

Ordinary Partnership

• In a partnership, a number of individuals sign a partnership agreement to establish how the business’s ownership, profits and liabilities are shared between them, and how partners may leave the partnership
• A partnership is similar to the sole trader structure, except that there are at least two partners
• No minimum capital requirements
• The partnership agreement will outline the capital contributions required by each partner

Opening Bank Accounts

Opening a bank account in the UK can be an arduous process. Often, the myriad of identification and other Know Your Client (“KYC”) requirements can result in a protracted and delayed process before a standalone corporate bank account is opened for a business.

Some companies will benefit by working with their advisers to open a client payment account (sometimes referred to as ‘trust account’) which can help reduce the business requirements and KYC process dramatically and allow an account to be opened within 1-2 weeks.

This service can only be provided by those firms with the appropriate regulatory permissions.

The legal ownership for this bank account remains with the adviser, however this is a separate, nominated payment account which the Company can fund in order for their adviser to make certain payments to employees, vendors and suppliers.