The United Kingdom is a developed country located in north-western coast of European mainland. The country is considered to have a high-income economy and is categorized as very high in the Human Development Index, ranking 13th in the world currently. It was the world's first industrialized country and the world's foremost power during the 19th and early 20th centuries. The UK remains a great power with considerable economic, cultural, military, scientific, and political influence internationally. World Bank has ranked UK at 8th position in term of Ease of Doing Business. Currency used at UK is Pound Sterling (GBP).
Taxation Overview:
- Her Majesty’s Revenue & Customs (HMRC) is responsible for the administration of all aspects of the UK tax system (Direct & Indirect Tax). Companies House is the United Kingdom’s Registrar of Companies and it is the key government organization that co-ordinates the administration of businesses in the UK.
- Assessee needs to register the business for Corporation tax within 3 months of starting of Business to HMRC.
- General Corporate Income Tax rate is 19% and standard VAT Rate is 20%. A flat 0.5% Stamp duty is levied on instruments that transfer stock or marketable securities.
- The UK has double tax treaties with more than 130 countries, making it one of the world's largest networks; there is no dividend withholding tax in the UK, irrespective of the location of the recipient.
- Personal Income Tax Rates ranges from 20% to 45% depending upon the slab of Income.
Private Limited Company – Limited by Shares (Ltd.):
This is most preferred structure of legal entity for company formation in the UK, especially for foreigners. It must be incorporated under the Laws of England and Wales or Scotland and Northern Ireland. It has shareholders with limited liability and its shares may not be offered to general public, unlike those of a public limited company.
- Shareholders: At least 1 shareholder is required. Such shareholder can be a non-resident or non UK citizen.
- Directors: Minimum 1 director is required. The director need not be resident or citizen of UK. However, HMRC and Banks may reject applications for those companies in which there is no resident director.
- Capital: Such company can be incorporated with nominal share capital.
- Office Space: It is mandatory to have a registered office address in the UK to form a company.
- Visit and stay in UK; Not required for company incorporation. However, certain banks may require the company principals to be physically present in UK at the time of bank account opening as part of their due diligence procedure.
Documents required:
- List of 3 proposed names in order of preference.
- Details of share capital of proposed company.
- Details of Registered Office Address in the UK.
- Individual Shareholders (Copy of documents such Passport, PAN Card/Aadhar Card/any other ID and Latest Utility Bill).
- Corporate Shareholders (Copy of Certificate of Incorporation, Articles of Incorporation, Memorandum of Association, any other ID and Latest Utility Bill).
- Proposed Directors (Copy of documents such Passport, PAN Card/Aadhar Card/any other ID, Latest Utility Bill and Birth Certificate).
Procedure and Estimated Time Frame:
- Once all above details/documents are collated, initiate incorporation process. It usually takes 4-5 days for the company to be incorporated once the documents are submitted to the office of the Registrar.
- Once the company is formed, apply for VAT and Tax Registration. It usually takes a month’s time to receive VAT number.
- Once the company is formed, apply for bank account opening simultaneously. It may take up to 1 month to open the bank account depending on the bank.
Can a foreigner start a business in UK?
Yes, a foreigner can start a business in Canada. The easiest way to start and register a business in UK is to engage a professional firm. The advantages of engaging a professional firm are:
- All incorporation formalities including applying for registrations (VAT, etc.) can be handled without you having to visit UK.
- The professional firm can also connect to a suitable banker and assist in opening bank account opening (in some cases, it may even be possible to open the bank account remotely, that is, without you having to visit UK).
- Such firms often provide the services of a Local Resident Nominee Director for the purpose of incorporation (if required).
- Once a company is incorporated various compliances are required to be completed such as filing annual return, maintaining accounts, filing tax return, etc. The professional firms usually assist the client in such post incorporation compliances as well.
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