Running a business in UK
The legal form of business
Sole traders are individuals who run a business on their own with no legal separate legal personality or limitation of liability and no legal formalities or administration or filing requirements.
Companies have a separate legal identity from their owners and can be:
- Private limited companies – limited by shares or by guarantee.
- Private unlimited companies – which can be registered with or without share capital and whose members have unlimited liability.
- Public companies – limited by shares.
The CA 2006 is the main source of law regulating companies incorporated and registered in England, Wales, Scotland, and Northern Ireland. Private companies limited by shares and public companies limited by shares are the most popular forms of business vehicle.
A private company can be limited by shares or by guarantee and is governed by CA 2006. Private companies limited by shares are much more common than private companies limited by guarantee, which are more typical forms for charities and non-profit organizations.
The most common options for an overseas company to establish a business presence are by:
- Incorporating a new company as a subsidiary.
- Purchasing an existing local company.
- Opening an establishment or branch.
- Appointing an agent.
Some EU entities can no longer be registered in the UK. These are:
- European public limited liability companies, known as Societas Europaea (SE)
- European economic interest groupings (EEIGs)
- SEs and EEIGs that did not make alternative arrangements before 1 January 2021 have been automatically converted into new UK corporate structures. This means they still have a clear legal status from 1 January 2021.
Bank account, banking regulations
You’ll need two documents: one to prove your identity and one to prove your address. Your home bank may be able to set up an account for you if it has a correspondent banking relationship with a British bank.
Many major UK banks also have so-called ‘international’ accounts. These are designed specifically for non-residents, so they’re a great option if you don’t have the documents to prove your UK address. In fact, you can even apply for an international account online. Barclays, Lloyds, HSBC, and NatWest all offer international bank accounts.
For more: https://wise.com/gb/blog/how-to-open-a-bank-account-in-uk
Tax rules: Corporation tax
Companies are subject to corporation tax, which is levied on corporate profits and other forms of income, as well as on chargeable (capital) gains made by companies. Corporation tax is an annual tax imposed by the annual Finance Act and the financial (corporation tax) year runs from 1 April to 31 March. The main rate of corporation tax is currently 19%. A surcharge applies to the prescribed profits of banking companies. The surcharge is 8% of the excess of the banking company's "surcharge profits" over a "surcharge allowance", as defined in the Finance (No. 2) Act 2015. The surcharge is treated as an amount of additional corporation tax payable by the banking company.
Corporation tax returns must be filed annually and the filing deadline is 12 months after the end of the accounting period.
Penalties apply in the case of late filing of corporation tax returns and interest charges apply in the case of late payment of corporation tax.
Special rules apply to companies deriving profits from North Sea oil and gas exploration and production activities.
There is also an optional beneficial tax regime for shipping businesses, by which profits from the operation of qualifying ships and connected qualifying activities, within certain limits, are exempt from corporation tax, and corporation tax is levied instead on a deemed tonnage tax profit, computed by reference to the net tonnage of ships operated by the company in question.
For now, the UK corporate rate of 19% continues to apply to NI company profits.
There are no state or local taxes on corporate profits.
Import/export regulations
- EORI number. You’ll need an EORI number that starts with GB to transfer goods between the UK and the EU. If you already have an EORI number you will need to check that it starts with GB and get a new one if not. More info: https://www.gov.uk/eori
- Import/export license. You’ll need to check if the goods are controlled and thus whether you need an import/export license. Such goods include food, livestock, and medicine.
- Tariffs. From 1 January 2021, the UK will apply a UK-specific tariff to imported goods called the UK Global Tariff (UKGT). The UKGT will apply to all imported goods unless the country you’re importing from has a trade agreement with the UK.
- CHIEF system. If you chose to complete customs declarations yourself (as opposed to engaging a customs intermediary) you will need CHIEF compatible software and a CHIEF badge.
- Customs declaration. https://www.h-m.co.uk/uncategorised/brexit-import-export-changes-from-1-january-2021/
- VAT registration threshold. For more than £85,000
Customer preferences
Willing to buy from foreign sellers
The U.K. falls under the average, with only 45% of British consumers saying they ordered from an international store in the past 12 months.
Most popular countries for import of goods
The United Kingdom is the fifth-largest export market in the world for U.S. goods and ranks as the largest European consumer of American imports.
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