Benefits and problems of registering a company in the UK in 2024

Benefits of UK company registration

1. UK company registration is simple. For example:
   • A single director and shareholder can form a private company.
   • 100% foreign ownership is allowed.
   • A UK company can be incorporated online in just one week.
   • A UK company is inexpensive to set up.
2. A UK company has an excellent global reputation, looking good to your customers, suppliers, governments and banks. That is because:
   • English common law is the basis of company law in many countries, so the UK company structure is well understood.
   • The UK is a stable, well-regulated jurisdiction. A UK company is, therefore, seen as a stable, well-regulated vehicle through which to conduct local and international trade.
3. The UK is an attractive tax regime for multinational Clients. For example:
   • A foreign company can open a UK corporate bank account and not be subject to UK tax if i) it has no sales in the UK ii) it has no office in the UK and iii) its beneficial owners reside outside the UK. However, using this structure will mean that the company will be tax resident elsewhere, where additional liabilities might arise. This structure also removes access to the UK’s network of tax treaties.
   • Dividends paid to UK companies are generally tax-exempt. The UK also levies no withholding tax on dividends paid to foreign residents.
   • Tax credits are available for companies involved in research and development (R&D). Large companies can secure deductions from their taxable income, which is 30% of their current spending on qualifying R&D.
   • Capital gains for companies selling subsidiaries (with at least a 10% holding) are tax-exempt if the subsidiary has been owned for at least one year.
   • A UK company can be legally tax exempt from UK tax (click link for more details) provided the UK company remains UK tax resident and operates through a branch/permanent establishment in a jurisdiction with which the UK has a tax treaty.
4. The UK is a good place in which and from which to do business. For example:
   • In the Heritage Foundation’s 2020 Index of Economic Freedom, the UK has the world’s 7^th freest economy. It scores particularly well (at 80%) for investment freedom and capital flows.
   • The country is perceived as having low levels of corruption. Consequently, it is a low risk environment for international investors, who can expect to receive i) good legal protection when investing ii) transparent contract bidding protocols and iii) fair treatment in courts if disputes arise.
   • The World Economic Forum ranks the UK as the world’s 9^th most competitive economy.
   • The UK workforce of 30 million is highly educated, qualified and offers a wide pool of talent for international investors.
5. The UK is an attractive location from which to trade regionally and internationally. For example:
   • The country’s large ports (including London, Felixstowe, Southampton, Bristol and Liverpool) connect the UK with the world. Cargo transit times between the UK to the east coast of the USA are 10 days, while to the rest of Europe just one day’s sailing time.
   • Heathrow airport is one of the world’s biggest and most connected transport hubs. Major European capitals are an hour away. New York is just six hours’ flight. Dubai seven hours.
   • The UK has more than 500 million consumers on its doorstep in the European Union (EU). However, accessing EU markets because more challenging in 2020 when the UK exited the bloc.
6. The UK government offers a range of business incentives. These include:
   • Tax relief
   • Venture capital programs
7. In 2021 the UK government set up a US$500 billion fund to encourage investments in i) technology ii) renewable energy and iii) life sciences. Healy Consultants can assist our Clients access funding for their ventures in these disciplines.
8. The UK has one of the world’s most stable, sophisticated banking systems. London is one of the world’s top financial centres and almost every international bank has a presence in the city. As a result, international investors have access to a wide range of financial products and support for business growth.
9. The UK insurance market is one of the world’s biggest. The sector attracts more than US$100 billion annually in premiums.
10. London has one of the world’s most important stock markets. The London Stock Exchange is an excellent option on which to raise funds for ambitious businesses.

Problems with UK company registration

1. On 30 January 2020, the UK formally left the European Union. This is likely to have a long-term negative impact on UK companies because:
   • It is more difficult for UK companies to access the large EU market because of tariffs and customs delays. Customs tariffs increase the costs of both imports and exports across the UK border. Higher costs blunt the competitiveness of UK firms.
   • It is more difficult for UK companies to hire European talent, because of the need to apply for work visas for non-Uk staff.
   • The UK must negotiate new free trade agreements with partners around the world, including not only the EU but also countries in Asia and the Pacific. These negotiations take time. The UK has still not signed a free trade agreement with the United States, its biggest trading partner after the EU.
2. Annual accounts must be prepared and submitted to the Inland Revenue and Companies House. Accounts submitted to Companies House are available for public inspection. However, dormant companies and ‘small companies’ defined in the Companies Act only need to submit abbreviated accounts. This means that only the company’s balance sheet and notes are made public, rather than the company’s income or cash flow statements.
3. The UK government plans to introduce legislation banning the use of corporate directors.
4. UK banks apply strict onboarding processes. A UK company will likely only be onboarded if the majority of directors and shareholders are UK resident.
5. Value added tax (VAT) is charged on the value of supplies of taxable goods and services made in the UK, including some exports to European Union (EU) countries. It is also chargeable on imports of goods from outside the EU. The main rates are 0% and 20%, but a few supplies are charged at 5%. Under the UK-EU Brexit settlement, Great Britain and Northern Ireland now have customs borders and a separate VAT system.
6. The UK is an expensive country from which to run a business. For example:
   • London has by far Europe’s most expensive office rents.
   • Salaries are higher than the European average.
   • The UK minimum wage is higher than most European countries but is on a par with Germany, France and other western European countries.
   • The cost of living is high in London compared to other large global capitals.

Best uses for a UK company

1. Companies based in the UK can reach more than 500 million consumers across Europe, offering great potential for foreign entrepreneurs and investors with business support and tax incentives.
2. Companies and limited liability partnerships registered in the UK can also be used as asset management Firms for funds registered in British Overseas Territories including i) Jersey ii) Guernsey iii) Isle of Man and iv) the British Virgin Islands