Company Registration in UK
Why choose UK for Company Registration?
The UK is one of the safest and easiest places to do business in the world. So You can Register a Company in UK. One of the highest-ranking countries in the World Bank’s Ease of Doing Business index. The United Kingdom has a fiercely independent, developed, and international trading economy that was at the forefront of the 19th-century Industrial Revolution. The UK has a strong reputation for rule of law, stability and impartiality in the working of its legal system, alongside world-leading dispute resolution, arbitration and mediation services.
Types of business entities
Sole traders
Sole trader, is a person who runs his/her own business as an individual and are self-employed. One can keep all business’s profits subject to payment of tax on them. One is personally responsible for any losses the business makes. One must also follow certain rules on running and naming a sole trader business.
Partnership
In a partnership, you and your partner (or partners) personally share responsibility for your business. There are two types of Partnership in UK:
Limited Partnership
Here at least one partner should have unlimited liability (Ordinary partner) and other partners can have Limited Liability (Limited partners). Limited partnerships must register with Companies House but requirements of annual return or file accounts may or may not arise.
Limited Liability Partnership
Here at least one partner should have unlimited liability (Ordinary partner) and other partners can have Limited Liability (Limited partners). Limited partnerships must register with Companies House but requirements of annual return or file accounts may or may not arise.
Limited Company
Limited companies can be limited by shares or limited by guarantee. A limited by shares companies are usually businesses that make a profit. This means the company is legally separate from the people who run it, has separate finances from your personal ones, has shares and shareholders and can keep any profits it makes after paying tax.
Private Limited Company
These companies may be limited by shares or by guarantee. The structure of a Private Limited company must have at least one member and at least one director. Directors do not have to live in the UK but companies must have a UK registered office address.
There is no minimum capital requirement for a private company limited by shares, and can be setup with a very small capital investment. These must be registered with Companies House.
Public Company
These companies must have at least 2 Shareholders and issued paid up share capital of 50,000 pounds. It should also have at least 2 directors and a qualified Company Secretary.
Public Limited Company have the right to raise funds from public and issue shares to them. These entities are formed for preferred listing in future.
Overseas Company/ Branch office
A UK establishment is a place of business or branch of an overseas company in the UK.
If an overseas company is carrying on business in the UK, it does not automatically mean that it must register with Companies house. You only need to register an overseas company when it has some degree of physical presence in the UK, such as a place of business or branch, where it carries on business
Subsidiary company
A UK subsidiary is simply a UK company that is owned by a non-UK company. The UK company is part of the same group as its parent, but it has separate legal personality, can enter contracts, has limited liability, and operates as a standalone entity. Normally it is subject to UK taxes and laws in the same way that any other UK company is.
You will also have to submit the accounts if either the accounts must be filed under the law of country in which your company is incorporated - the 'parent law' or your company is incorporated in an European Economic Area (EEA) state and the parent law requires you to prepare and disclose accounts but does not require such accounts to be audited or delivered
Taxation
Corporate Tax
Payment of Corporation Tax on profits arises if you fall under any of these category:
- a limited company
- any foreign company with a UK branch or office
- a club, co-operative or other unincorporated association, e.g., a community group or sports club.
Corporate tax rate for the FY 2023-24 shall be 25% but for qualified small business it shall remain 19%.
VAT
Value Added Tax is a tax added to most products and services sold by VAT-registered businesses. Businesses have to register for VAT if their VAT taxable turnover is more than £85,000. They can also choose to register if their turnover is less than £85,000.
Goods exported outside the UK are zero-rated, subject to conditions. No VAT is charged on goods or services that are exempt from VAT or outside the scope of the UK VAT system.
Distinction between Branch and subsidiary (limited company)
Basis | Branch office | Subsidiary (limited company) |
|---|---|---|
Incorporation | Branches are only registered in the UK as an overseas entity. | Subsidiaries are incorporated in the UK. |
Ownership | UK Branches are not owned per se, as they are simply part of the parent company. | Subsidiaries are owned by the parent company, although you can also have local partners with an ownership interest. |
Liability | Any liability incurred by a UK branch will be owed by the parent company as well. | Any liability fenced in a subsidiary does not impact the parent company unless it provided a guarantee or similar. |
Financial reporting | A UK branch files the accounts of the foreign company with Companies House in the UK, together with a trading statement in respect of the UK establishment. | subsidiaries file accounts on a standalone basis. |
Audit | Branches do not require statutory audits.
| All UK incorporated companies require a statutory audit. |
Tax | For Branches, corporation tax is charged on UK profits only. | UK subsidiaries pay tax on their worldwide profits (subject to credits for taxes suffered overseas) |
Estimated time | Registering a branch is a longer and more complicated process that often takes a number of weeks. | Incorporating a subsidiary can be done very quickly (even on the same day) |
FAQs
Qu. Do I have to visit the UK to register my new UK company?
Ans – No. You can officially register your UK limited (or LLP or LPB) company from your current location; there is no need for your presence within UK jurisdictions. You also do not have to be a UK citizen or resident to incorporate your new UK business.
Qu. Can a non-resident set up a company in the UK?
Ans – Yes, a non-resident can form a UK company as you are not required to be a UK resident to register a limited company with Companies House. The only thing you need to register a UK company is a UK-registered office address, which can be a friend or family member’s address or a virtual office address.
Qu. Does a UK company need a resident director?
Ans –No, it is not a requirement to have a resident director for non-UK resident company formation. The director of your business can be a non-UK resident providing your business has a UK registered office address.
Qu. Is it mandatory to have a business bank account to operate the business?
Ans – There is no mandatory legal requirement for a UK company to have a business bank account in the UK. You might choose to use a bank account in your location to handle your business transactions.
Qu. Can a UK company have a foreign bank account?
Ans – Yes, a UK company can have a foreign bank account. Bank accounts can be located anywhere in the world.
