Starting a business in the UK

The UK’s economy is one of the largest and most dynamic in the world, ranking as the 6th biggest by GDP globally. The country is a major draw for foreign businesses that want to access a mature and stable market. The Organisation for Economic Cooperation and Development (OECD) forecasts the UK’s economy will grow by 1.2% in 2025. This upward growth trajectory signals promising opportunities for businesses.

As a global financial hub, the UK offers great access to a diverse consumer base, skilled workforce and advanced infrastructure, making it an ideal destination for expanding your business footprint.

With the necessary documents ready, your business registration can be completed swiftly. This efficiency is further supported by the absence of a minimum capital requirement for private limited companies.

The UK's regulatory framework also accommodates the needs of different businesses. For instance, while it is necessary to appoint at least one director, this individual does not need to reside in the UK or hold UK citizenship. However, appointing one can be advantageous, especially when dealing with banking applications. If needed, Hawksford offers professional director services, which can help streamline the process of establishing your presence in the UK without relocation.

For private limited companies, the position of company secretary is optional but recommended as it can help streamline your administrative functions and add value to your business. Corporate service providers like us can help you with this.

In April 2023, the UK’s corporate tax rate rose from 19% to 25%. Despite this, the tax structure remains supportive for growing a business as the 19% rate is still applicable to businesses with profits of no more than £50,000. Marginal relief is also available to companies with profits between £50,000 and £250,000.

If you are operating across borders, double taxation may be a key concern. To support businesses, the UK has an extensive network of double tax treaties ensuring income is only taxed once. These agreements cover over 100 countries, including China, France, Italy, Belgium, Canada, the United States, Ireland and the Cayman Islands.

No matter where you choose to do business, success can be dependent on the strength and reliability of the country’s infrastructure. In the UK, this is not only well-established but also continually improving.

For instance, the High Speed 1 (HS1) rail line, which connects London to the Channel Tunnel, has transported over 200 million passengers since its launch in 2003. What’s more, the UK's extensive rail, port and airport infrastructure ensures the efficient movement of goods and people domestically and internationally.

The UK is the birthplace of over 100 unicorns – innovative companies valued at US$1 billion or more. This exceeds the combined total of unicorns in France, Germany and the Netherlands. Looking ahead, the government aims to establish the country as a global hub for innovation by 2035. This commitment means that innovative businesses in the UK can expect continued support.

Currently, businesses can contact the UK’s dedicated agency, Innovate UK, for funding, advice and training programmes. There are also tax reliefs and incentives for research and development work.

The UK ranks among the most educated nations globally, with a high literacy rate and a significant percentage of its population receiving tertiary education. The country is home to four of the top ten universities in the world, including Imperial College London and the University of Oxford.

Besides producing talent, there are also resources and avenues in the UK for upskilling.

Branches are typically used by businesses looking to expand into the UK and actively conduct business operations. A branch operates as an extension of the parent company, allowing you to carry out business, sign contracts and generate revenue in the UK.

When you set up a branch in the UK, the parent company will have direct ownership and control over its operations. Since the branch doesn’t have a separate legal personality, your parent company will be fully liable for its debts and obligations.

If your goal is to test the market without conducting revenue-generating activities, you may want to consider setting up a representative office instead. This is typically used for activities such as market research or promoting the parent company, but a representative office can’t engage in direct business operations like selling products or services.

As your business grows and strengthens its presence in the UK, you may choose to transition from a branch to a limited company.

The formation of a limited company is the preferred route for overseas companies looking to do business in the UK. As a separate legal entity, a limited company is accountable for its own debts, independent of its owners. This separation offers significant legal protection as the personal assets of the company’s shareholders are generally shielded from business liabilities.

The formation of a private company limited by shares is a particularly favoured option. This company type allows for a single shareholder, who can also act as the director, to start the business. There is no statutory limit on the number of shareholders, making it suitable for both small startups and larger ventures.

Additionally, if the business grows and meets certain criteria, it can later be re-registered as a public company, offering further opportunities for expansion and investment.

A partnership might be a suitable option if you’re planning to collaborate with others. You may consider a limited liability partnership (LLP) where your partners’ liability is limited to the amount they have invested in the LLP.

An LLP requires at least two partners, who can be individuals or corporate entities, giving you flexibility in how you structure your partnership. There is no statutory upper limit on the number of partners. You can also have designated and non-designated partners, allowing you to assign different levels of involvement and responsibility based on what works best for your UK business.

Additionally, an LLP is tax-transparent, meaning that the partnership itself does not pay tax – the individual partners are taxed based on their share of profits instead. This structure can be particularly advantageous if the LLP has no UK-resident partners or activities in the UK, as income may not be subject to UK taxation. This makes it an attractive option for partners based in low-tax jurisdictions while simultaneously giving you the benefit of access to the UK's robust legal framework and sophisticated company law infrastructure.

As part of your business’s registration, a written agreement will need to be drafted to guide how the LLP will be managed, including profit distribution and decision-making processes.