Setting Up in the UK
The United Kingdom offers excellent opportunities to foreign companies looking to expand their markets and benefit from a business-friendly environment, a favourable tax regime and a diverse pool of talent.
Whether you’re thinking of expanding to the UK or wanting to set up here for the first time, St Matthew can provide you with strategic advice and solutions tailored to your needs. We specialise in helping foreign companies set up subsidiaries in the UK, making sure they are compliant from day one and can trade at the earliest opportunity.
Our specialist teams will ensure that every step of your entry into the UK market is seamless and handled promptly. As a leading firm of chartered accountants, we support businesses across a wide variety of industries, helping them establish a foothold and become as tax efficient as possible.
Setting up in an unfamiliar country can be complicated and challenging, but with St Matthew by your side, you won’t have to worry about a thing. Our experienced team will ensure that your company is structured to limit liabilities and that its financial systems are managed properly.
We’ll take care of everything you need when it comes to establishing a presence in the UK. Our full suite of solutions includes but is not limited to:
- Registering your company
- Filing documents with Companies House
(the UK’s registrar of companies)
- Providing you with a registered office address and a virtual office
- Opening your bank account
- Tax and VAT registration
- Preparation of tax and VAT returns
- Ongoing bookkeeping and accounting
- Payroll services
- Taking care of your personal tax affairs if you decide to move here
UK Business Structures
When setting up in the UK, there are several business structures to choose from. Below are some of the most common types:
Limited Company – a privately managed business that is owned by shareholders and run by directors. The incorporated business structure is a separate legal entity and, as such, is responsible for everything it does. The company’s finances are legally separate from the personal finances of the owners who are not liable for its debts. Any business debts are paid by the business, not the owners or shareholders. If the business fails, their personal finances are protected. The only debt liability incurred is up to the value of their investment or what they guarantee to the company.
Limited companies are very tax-efficient business structures because they pay corporation tax at 19% on their profits, not income tax. After paying the tax, profits can then be distributed to shareholders in the form of dividends.
- Selecting a name
- Choosing directors and a company secretary
- Deciding on who are the shareholders or guarantors
- Identifying people with significant control (PSC) over the company.
- Preparing documents about the running of the company.
- Registering the company with Companies House.
Limited Liability Partnership (LLP) – a partnership in which some or all partners have limited liabilities. They are not personally liable for their business’s debts, only for the amount of initial capital they invested. To form an LLP, you must have two or more members, which can be a person or a company, known as a corporate member. If the company fails, creditors cannot go after a partner’s personal assets or income. Each member of the partnership is taxed on their share of the profits.
- Selecting your business’s name.
- Registering your business address.
- Creating the LLP agreement.
- Registering the agreement with Companies House.
Limited Partnership (LP) – is a partnership made up of two types of partners: general partners and limited partners. There must be at least one of each type in an LP. The general partners oversee and run the business and have limited liability for the company’s debts. They are entitled to a share of the profits as laid out in the partnership agreement. General partners can be individuals or legal entities, such as an LLC or corporation.
Limited partners do not participate in the company’s management, have no voting powers, and have no control over the LP’s operation. The only contribution they make is their monetary investment. They are not personally liable for the LP’s debts, although they may lose their financial investment.
Typically, LPs are not taxable entities. Partners are taxed separately on their share of the profits or losses.
- Selecting a name.
- Having a registered address.
- Appointing general and limited partners.
- Registering with Companies House.
Public Limited C ompany (PLC) – a type of company that offers shares to the general public. They can be bought and sold by anyone, either in an initial public offering (IPO), privately bygift or sale or on the stock exchange. The shares’ owners have limited liability for company losses that don’t exceed the amount they paid for the shares. One of the main advantages of PLCs is that capital can be raised through share sales.
- Having a minimum of two shareholders.
- Having issued at least £50,000 worth of shares.
- Registering with Companies House.
- Having at least two directors.
- Having a qualified company secretary.
Limited by Guarantee – this type of setup is principally used by charities, community organisations and any other company that wants to run on a not-for-profit basis. There are no shareholders or share capital; instead, there are members who act as guarantors. Surplus income is not distributed between members but used for other things such as repairs, equipment upgrades, or to promote the organisation’s non-profit objectives. A company limited by guarantee is legally separate from its members and responsible for its debts. Members cannot be made personally liable for any debts that the company may incur.
- Selecting a name.
- Having a UK registered office.
- Having a UK registered office.
- Creating written rules with details of the company’s objectives.
- Providing details of directors and all guarantors.
Sole Trader – a self-employed person who is the exclusive owner of their business. They are entitled to keep all the profits and are liable for all losses. Tax is paid on business profits minus expenses. Sole traders do not have to be registered at Companies House.
Operating as a sole trader is the simplest option and has the least regulatory and accounting requirements. It is recommended for businesses with a small turnover.
- Informing HMRC (Her Majesty’s Revenue and Customs) that you pay through Self Assessment.
Creating a UK Subsidiary
The process of setting up a UK subsidiary is similar across most types of business structures. With St Matthew, it is fast, simple and straightforward and can be completed in just two days. You don’t need share capital or a notary, and because it is carried out electronically, you are not required to attend any meetings or come to the UK to file paperwork.
- Apply to Companies House
- Open your business bank accountWe recommend having an account with an online financial company such as TransferWise and Revolut. If you would like a business account with a traditional bank, you will have to come to the UK. Please note that most high street banks don’t open business accounts unless one director is a UK resident.
- Register your company for VATNow your subsidiary is up and running in the UK and will be subject to ongoing filing requirements. We can prepare and submit these for you so you can concentrate on the day-to-day running of your business.
Ongoing Filing Requirements
- Subsidiaries are required to file their accounts with Companies House each year. This has to be done within ten months of the end of the financial year.
- Companies have to file a confirmation statement to Companies House every 12 months. This verifies the information they have about your company is accurate and up to date. The statement is a snapshot of the ownership and management of a business and contains:
- The details of your registered office, directors, secretary and the address where you keep your records.
- Company type.
- Principal business activities.
- Statement of capital.
- Share capital (companies limited by shares only)
- Persons with significant control (PSCs).
Company directors are responsible for completing and submitting accurate confirmation statements. Failure to do so on time could result in prosecution.
- An annual audit might be required, if annual turnover exceeds £10.2 million, assets are worth more than £5.1 million or if the subsidiary employs more than 50 people.
One of the key factors that make the UK such an attractive place for foreign companies is the low corporation tax. A rate of 19% applies whether or not profits are distributed.