Setting up in the UK. UK Trade & Investment

Setting up in the UK UK Trade & Investment

Setting up in the UK Setting up your business in the UK The UK is ranked second among G20 countries for ease of doing business in the World Bank s 2013 Doing Business survey. By locating your business in the UK, you will benefit from our highly competitive business environment which has one of the lowest main corporate tax rates in the European Union (EU), generous tax allowances and a highly skilled and motivated workforce. The UK is the number one destination in Europe for inward investment.

UK Trade & Investment www.gov.uk/ukti 1 Registering your business The UK has an open, transparent and business-friendly system to encourage the formation of new businesses and speed up your entry into the UK market. New limited companies must register with Companies House. This costs only 15, and takes as little as 24 hours. Most businesses in the UK are sole traders, limited companies, or business partnerships: A sole trader runs their own business as an individual, keeping all profits after taxes. A limited company is a business which keeps its financial liability separate from the owners personal finances. Corporation tax must be paid on profits, but any remaining assets can be shared among its shareholders the people who own the business. In a business partnership, the partner(s) personally share responsibility for running the business, sharing all business costs and profits, but each partner will pay tax on their share of the profits. An overseas company trading in the UK or doing business in the UK or doing business from the UK also needs to register with Companies House by completing an OS INO1 form. www.gov.uk/set-up-business-uk

2 Setting up in the UK Visas and migration More and more skilled people are coming to the UK each year. In 2012, the UK processed 2.6 million visa applications with 94 percent of all non-settlement visa applications processed within three weeks and 99 percent in six weeks. The UK works continuously to improve the service provided to all visa customers, introducing faster processing for priority customers and improved visa application processes across the world. In 2012, the UK processed 2.6 million visa applications globally. The entrepreneur and investor visa processes have been reformed, and the intra company transfer scheme is designed to enable your business to transfer employees to your UK base, either on a long-term basis or for frequent short visits. More information on visa routes for entrepreneurs, investors and skilled workers can be found on the UK Visa & Immigration Service website. www.gov.uk/government/ organisations/uk-visas-andimmigration

UK Trade & Investment www.gov.uk/ ukti 3 Operating your business Funding opportunities By locating in the UK, businesses may be eligible for national and EU funding initiatives including government grants, finance and loans, business support and start-up/sme (small and medium-sized enterprise) funding. The business finance and support finder tool on the GOV.UK website can help identify publicly funded schemes, available in the UK. www.gov.uk/businessfinance-support-finder Banking in the UK Usually, new businesses will need a bank account to conduct business in the UK. Before setting up a bank account for new customers, UK banks are required to undertake customer due diligence as part of the UK antimoney laundering regime (Money Laundering Regulations 2007). Know Your Client procedures, involving the identification of customers and their source of funds are a key part of the process, helping ensure banks know who they are dealing with. Choosing the right bank and getting your documentation ready and certified in advance of your application can help speed up the process. The UK Advisory Network (UKAN) can help you contact the departments of major banks and other financial service companies who specialise in dealing with inward investors. www.gov.uk/government/publications/ inward-investor-support-directory Corporate tax The UK Government is committed to creating the most competitive tax regime in the G20 and has reformed the corporate tax system to make it more attractive to international businesses. The corporation tax rate is currently 23 percent and will be cut further to 21 percent in 2014 and 20 percent in 2015. This is by far the lowest it has ever been in the UK, the lowest in the G7 and joint lowest in the G20.

4 Setting up in the UK UK-based companies can benefit from the Patent Box. This provides an attractive opportunity for businesses to reduce the costs associated with the commercial exploitation of IP. A reduced 10 percent corporate tax rate applies to Patent Box profits. The relief applies to worldwide profits from inventions patented by the UK Intellectual Property Office, the European Patent Office and certain other patent offices. Through a generous UK research and development (R&D) tax credits scheme, a large company can reduce qualifying R&D costs by approximately eight percent and an SME by approximately 25 percent. The UK also has an extensive range of capital allowances that allow the costs of some capital assets, such as production machinery, to be written off against taxable profits. A majority of UK-based companies benefit from an exemption from corporation tax on foreign dividends that they receive. The UK has one of the largest networks of taxation treaties in the world, covering over 100 countries. UK treaty policy over many decades has been to reduce withholding taxes on interest and royalties to zero wherever possible. Patent Box www.hmrc.gov.uk/ct/ forms-rates/claims/patent-box.htm R&D tax credits www.hmrc.gov.uk/ct/ forms-rates/claims/randd.htm Countries the UK has Double Taxation Agreements with www.hmrc.gov.uk/ cnr/withholding-tax.pdf Indirect taxation Value Added Tax (VAT) is due on most goods and services supplied in the UK, and on the importation and acquisition of goods and some services. A company has to charge VAT when their taxable turnover is above or expected to be above the registration threshold. For more information visit Her Majesty s Revenue & Customs (HMRC) website. www.hmrc.gov.uk/vat/start/ introduction.htm

UK Trade & Investment www.gov.uk/ukti 5 The UK is committed to creating the most competitive tax regime in the G20

6 Setting up in the UK Companies that are recruiting staff can benefit from the UK Government s Jobcentre Plus network, which helps employers to fill vacancies. It also provides a free and wide-ranging service that includes: advice on recruitment methods and procedures, information on the availability of suitable applicants; Skills and recruitment The UK has the second-largest labour force in the EU at over 30 million, a strong skills base, and a flexible labour market with regulations designed to protect employees, and to ensure that companies can operate effectively. Information on UK employment regulations in the UK is available from the GOV.UK website, which provides companies with practical advice on the recruitment and management of staff, employment law, pay and pensions. www.gov.uk/browse/ employing-people circulation of vacancies locally, nationally or internationally; advice on difficulties in filling vacancies, or on employing people with disabilities. There are also private sector agencies which offer recruitment services, a range of which are available through the UK Advisory Network. www.gov.uk/government/publications/ inward-investor-support-directory

UK Trade & Investment www.gov.uk/ukti 7 National Insurance National Insurance Contributions (NIC) must be paid by employees and employers. UK employers pay NIC on the earnings of each individual employee over a threshold weekly salary. On average, UK employers pay less in NIC/social tax contributions than employers in most other European countries. www.hmrc.gov.uk/ni/index.htm Commercial property Commercial and industrial premises are widely available in towns and cities across the UK, both for rent and outright purchase. The introduction of Enterprise Zones by the UK Government offers a combination of simpler planning rules, financial incentives and business-ready infrastructure to encourage businesses to establish themselves there. Many of them comprise sector clusters, where businesses from the same sector are co-located within the Zones for their mutual benefit. UK Trade & Investment can help you find the right property in the best location for your business. We can advise and guide you through the UK planning process. ICT infrastructure The UK s ICT infrastructure meets the key requirements of international companies, including the wide availability of superfast broadband and Wi-Fi. The overall quality and reliability of UK ICT infrastructure is a critical location factor for businesses across all sectors. According to the IT Industry Competitiveness rankings produced by the Economist Intelligence Unit, the UK is ranked as one of the world s leading locations for its IT environment. The rankings measure IT infrastructure, IT skills base, support for the IT sector, R&D environment, legal and business environment.

8 Setting up in the UK How UK Trade & Investment can help For specific help on setting up in the UK please visit: www.gov.uk/ukti The UK Advisory Network (UKAN) for inward investors has members from organisations across a range of sectors. These members provide support services to companies investing in the UK, helping them identify high quality and trusted private sector expertise. The UK is one of the easiest places in the world to set up a business. If you re looking for a dynamic company location within a stable investment environment, the UK is the ideal choice. www.gov.uk/government/publications/ inward-investor-support-directory Our experts are impartial and highly professional, and available to guide all businesses through each step of the set up process.

Images: cover VisitBritain/Pawel Libera p2 Dave & Les Jacobs/Cultura/Getty Images p5 London on View p8 VisitBritain/Eric Nathan

www.gov.uk/ukti UKTI UK Trade & Investment is the Government Department that helps UK-based companies succeed in the global economy. We also help overseas companies bring their high-quality investment to the UK s dynamic economy acknowledged as Europe s best place from which to succeed in global business. Disclaimer Whereas every effort has been made to ensure that the information in this document is accurate, neither UK Trade & Investment nor its parent Departments (the Department for Business, Innovation and Skills, and the Foreign and Commonwealth Office) accept liability for any errors, omissions or misleading statements, and no warranty is given or responsibility accepted as to the standing of any individual, firm, company or other organisation mentioned. Crown Copyright 2014 You may re-use this information free of charge in any format or medium, strictly in accordance with the terms of the Open Government Licence. To view this licence, visit: www.nationalarchives.gov.uk/doc/open-government-licence or email: psi@nationalarchives.gsi.gov.uk Where we have identified any third party copyright information in the material that you wish to use, you will need to obtain permission from the copyright holder(s) concerned. Any enquiries regarding this material should be sent to us at enquiries@ukti.gsi.gov.uk or telephone +44 (0)20 7215 5000. To find out more, scan this QR code with your smartphone www.gov.uk/ukti Published January 2014 by UK Trade & Investment URN UKTI/14/551