The UK offers excellent opportunities to foreign businesses looking to expand their market or benefit from the UK’s generous reliefs and extensive pool of talent.
Registering a new business in the UK is a relatively simple process, however, how it is organised and structured could have a significant effect on the company’s duties, responsibilities and tax arrangements.
Setting up
The most common method for setting up a new UK business, typically involves registering your company with Companies House, under a process known as incorporation. This will allow you to establish a limited company.
In this type of company, members’ liability is generally limited to the amount paid on the shares they hold.
If a limited company isn’t suited to you or your objectives there are other forms of company structure, such as sole traders, partnership, public limited companies and limited liability partnerships – each of which places different responsibilities on its directors and shareholders.
For example, Companies House requires that Directors of a limited company are personally responsible for submitting yearly accounts and the company’s annual return (or completing a confirmation statement in most cases) to the Registrar of Companies.
Overseas companies can also set up a UK establishment. This is generally defined as a branch or any place of business that is not such a branch. The overseas company will, however, still need to register the UK establishment with Companies House.
The ins and outs of UK taxation
The UK tax regime is one of the most favourable to businesses worldwide but it is complex, with a variety of reliefs, exemptions and allowances for each type of tax.

• Corporation tax – corporation tax is paid by companies on the profits of their businesses both on income and gains. The UK’s corporation tax rate is already the lowest of the G20 countries and the British Government intends to further cut the rate of corporation tax from 19 per cent to 17 per cent in 2020 as part of its plan to build a “super competitive economy”.
• Value added tax (VAT) – VAT is levied at the point of sale of most goods or services. It is paid by most types of companies and individuals and it may be possible for a company to pass the tax charge on to customers. Once your business reaches a certain level of annual turnover (currently £85,000) you must register for VAT with HMRC.

• Income tax – income tax is paid by individuals and trusts on their income and various allowances and exemptions may apply. Individuals are entitled to an annual personal allowance before they pay tax.
• National insurance contributions – most people who work must pay national insurance contributions (NIC), a form of tax that depends on their level of earnings. The amount of NIC that you will have to pay will depend on, among other factors, your age, if you are employed or self-employed and the type of work you do.

• Capital gains tax (CGT) – CGT is a tax paid by individuals on gains of a capital nature. When you dispose of certain assets that have increased in value, the gain, real or notional, may be taxable. The rate of CGT paid depends on the individual’s overall income.

• Stamp duty (SDLT) – stamp duty is the tax paid when buying property or shares. Stamp duty land tax is paid on property or land purchases. Stamp duty is also paid on the purchase of shares in a limited company. 

Get a helping hand
It is strongly advised that you seek help with setting up your UK subsidiary from an accountancy firm that has experience in this area.
At Grunberg & Co we have helped numerous overseas companies establish a base in the UK and we can assist you in taking full advantage of the reliefs and benefits available to you.
Our experienced team can assist in ensuring that all the administrative tasks are handled efficiently and compliantly, while ensuring that your new enterprise is compliant with UK tax and is structured in a way to limit liabilities.
Thanks to our close partnership with Reanda International, via our own wholly owned UK subsidiary Reanda UK, we can access the information we need from more than 34 jurisdictions around the world.
By working with our accountants, tax and business advisors we can take the stress out of setting up a UK business, so that you and your management team can focus on running and expanding your business.