Business entities in UK in 2023
Healy Consultants Group PLC will assist our Clients to set up a business in the UK with an optimal British corporate structure. There are several ways of doing business in UK, the most common being the registration of a limited liability company.
The British limited liability company
- Clients who wish to set up a business in the country are recommended setting up a limited company in UK (private limited company). This entity requires i) one director ii) one shareholder (both of whom can be non-UK residents) and iii) a minimum paid-up capital of £1. The registration of a British LLC can be completed in one week;
- A UK LLC is subject to corporate income tax at a standard rate of 19% and it must file financial statements with the Companies House;
- Best uses: An LLC is the most common type of business entity in the UK and it is most suitable for foreigners who are interested in starting trading or service companies in the country.
The British public limited company
- Public Limited Companies require i) a minimum capital of £50,000 ii) 2 shareholders and iii) 2 directors (who can be foreigners living outside of the UK) and iv) a qualified company secretary;
- All PLCs are required to i) register with the Companies House and ii) apply for a trading certificate before proceeding with conducting business in the country;
- Best uses: PLCs are recommended for larger projects that require raising of public funds, as this is the only type of business entity that can be listed at the London Stock Exchange.
The British company limited by guarantee
- In such companies, the members’ liabilities are limited to the amount contributed by each member to the company’s assets. A company limited by guarantee does not have any share capital;
- For incorporation, a Statement of Guarantee must be submitted stating the distribution of the company’s assets among the members when the company is wound up;
- Companies limited by guarantee are required to have at least i) 1 member and ii) 1 director, both of whom can be foreigners and non-UK residents;
- Best uses: A company limited by guarantee is recommended for set up of not-for-profit company, such as a charity.
The British limited liability partnership
- Limited Liability Partnerships are required to have i) at least two members (who can be corporate members) and ii) one manager. All members of an UK LLP have limited liability over the debts and losses of the partnership;
- During registration, LLP must submit an Agreement stating i) distribution of profits ii) decision-making authority iii) members’ responsibilities and iv) entry and exist policies;
- The LLP must submit a partnership Self-Assessment tax return to HM Revenue and Customs (HMRC). Furthermore, all partners must i) submit an annual personal self-assessment tax return ii) pay income tax on their share of the profits and iii) pay National Insurance;
- Best uses: The main advantage of a limited liability partnership is that it is a legally tax-exempt business entity. It is recommended for those Clients who are looking to render professional services in the UK.
The British Branch Office
- The British Branch Office requires i) a resident manager and ii) a local registered address. The UK Government does not specify a minimum paid up capital requirement;
- Branch registration requires that the parent companies submit a i) certified copy of the company’s constitutional documents; and ii) copy of latest set of accounts;
- A Branch Office is subject to a 19% corporation tax. The UK does not levy any additional tax on branch remittances to their overseas office;
- Best uses: Branches are usually recommended for foreign banks and other financial service providers that wish to conduct activities in the UK. It is also a lucrative option for Clients who wish to simplify their administrative burden relating to preparation of their financial statements at the group level.
The British Representative Office
- Representative Offices are required to register with i) the Companies House and ii) the HM Revenue and Customs before starting their business activities in the country;
- A resident representative is required for all representative office;
- Best uses: A RO is the optimal solution for Clients willing to explore the UK market prior to investing in the country. A Representative Office is not allowed to conduct sales in the country.
|LLC||UK tax exempt LLC||PLC||Limited by guarantee||LLP||Rep. Office||Branch|
|How long to set the company up?||2 weeks||2 weeks||2 weeks||2 weeks||2 weeks||2 weeks||2 weeks|
|How long to open company bank account?||6 weeks||6 weeks||6 weeks||6 weeks||6 weeks||6 weeks||6 weeks|
|Wholly Foreign owned?||Yes||Yes||Yes||Yes||Yes||Yes||Yes|
|Minimum paid-up share capital?||£1||£1||£50,000||None||None||None||None|
|Must file annual corporation tax return?||Yes||Yes||Yes||Yes||No||No||Yes|
|Tax Registration Certificate required?||Yes||Yes||Yes||Yes||No||No||Yes|
|Corporate Bank Account recommendation||HSBC UK||Bank of Ireland||RBS Group||SCB||Barclays PLC||Santander Bank||HSBC UK|
|Does our Client need to travel?||No||No||No||No||No||No||No|
|Resident director/representative required?||No||No||No||No||No||Yes||Yes|
|UK shareholder required?||No||No||No||No||No||No||No|
|Minimum directors/representatives allowed?||1||1||2||1||1||1||1|
|British resident company secretary required?||No||No||Yes||No||No||No||No|
|Corporate shareholders/members allowed?||Yes||Yes||Yes||Yes||Yes||Yes||Yes|
|Public register of shareholders and directors?||Click link||Click link||Click link||Click link||Click link||Click link||Click link|
|UK Corporate Tax Rate?||19%||0% (Click link for more information)||19%||19%||0%||0%||19%|
|Annual financial statements required?||Yes||Yes||Yes||Yes||Yes||Yes||Yes|
|Statutory audit always required?||No||No||Yes||No||No||No||No|
|Allowed to issue sales invoices?||Yes||Yes||Yes||Yes||Yes||No||Yes|
|Allowed to sign contracts?||Yes||Yes||Yes||Yes||Yes||No||Yes|
|Allowed to import and export goods?||Yes||Yes||Yes||Yes||Yes||No||Yes|
|Can rent an office in UK?||Yes||No||Yes||Yes||Yes||Yes||Yes|
|Can buy UK property?||Yes||No||Yes||Yes||Yes||No||Yes|
|Can own equity in other UK companies?||Yes||Yes||Yes||Yes||Yes||No||Yes|
|Estimate of total business setup costs in Yr. 1||£8,990||£8,990||£9,890||£7,140||£8,090||£7,970||£9,490|
|Estimate of total annual costs thereafter||£4,540||£3,940||£4,275||£3,640||£3,640||£4,220||£3,940|
|Sample Engagement fee Invoice||View invoice||View invoice||View invoice||View invoice||View invoice||View invoice||View invoice|
Let us know if you require Healy Consultants Group PLC’s insights to engineer the optimum corporate structure for setting up a business in the UK.