By Dipesh Shah, Immigration Partner at JMW Solicitors
With many international businesses having desires to set up a branch in the UK, it’s important to consider the risks and appeals of doing so.
The UK’s visa options are an attractive selling point for worldwide business owners and entrepreneurs and can help to offset the difficulties that might come with setting up a business in the UK as a foreign national. Dipesh Shah, a corporate immigration partner at JMW Solicitors, explains the important things to consider before setting up your UK company as a business owner from elsewhere in the world.
Why would foreign businesses choose to operate in the UK?
Due to the United Kingdom being such an established country and one of the world’s leading areas in terms of innovation, business development, and technology, this makes it a desirable destination for businesses to monopolise on. After all, the UK is considered to be the second most entrepreneurial country in the world (according to CEOWORLD Magazine’s Entrepreneurship Index 2019).
The UK government also supports its inhabitants by providing a high standard of living, publicly-funded healthcare, and state education, meaning that employees who decide to migrate with the business will be well looked after and cared for whilst on their visa or if they should choose to apply to become UK citizens.
The United Kingdom embraces modern, fair trading practices and equality within the workplace – another key attribute for those who may struggle to receive a fair wage and work-life balance in their home countries.
There’s also a great network here for the UK and European businesses to liaise and trade together, with access even possible without a visa after Brexit for those who are British nationals.
Before you start
Before putting your business plan into motion, make sure that it’s well-executed and you have thoroughly thought it through. Having a strong idea with unique selling points (USPs), and a clear direction of where you want to head with it, will help you to plan your next steps and understand which processes will help you to get there.
You’ll also want to think about the visa that you’ll require, as there are many different types that are applicable for different lengths and business types. Your business should be in line with UK legal trading regulations and you should have a solid knowledge of business legal structure and the relevant support, such as a solicitor, to help you with understanding this.
Know your visa options
There are four visa options available to those looking to start a business in the UK. These include:
Business Visitor Visas
This type of visa is ideal for business visitors and prospective entrepreneurs carrying out permitted paid work such as attending meetings and interviews, signing contracts or completing deals, receiving briefs regarding a customer in the UK’s requirements, or a fact-finding mission. This visa will allow the UK stay of up to six months.
Sole Representatives of Overseas Firms
This is where a parent company from overseas can send over a senior employee to act as a sole representative to establish a subsidiary. They can also register a UK branch with this visa as long as they don’t have an existing branch here already. There must not be existing subsidiaries or representatives within the UK when using this visa.
The Innovator visa acts as a replacement for the Tier 1 Entrepreneur Visa and allows the opportunity for entrepreneurs to set up a business in the UK without having much investment. However, to use this type of visa you must prove that you have an innovative business idea, be experienced in business operations, have at least £50,000 in your possession, understand the English language at CEFR level B2, and have enough maintenance funds to cover your living costs.
Mainly targeted at young and dynamic innovators, this visa helps those who are looking to venture into the world of business for the first time and has a similar attainment method as the Innovator visa, but does not require any initial investment.
Understand the legal structures for businesses in the UK
Depending on the size of your business and its structure, you’ll need to know which business type your new company will fit into. For example, will you be trading alone? For this, you will need to register your business as a sole trader. Do you plan on trading the shares of your business publicly? As long as you have a minimum share capital of £50,000 and have paid at least 25% prior to your business start up, you can register as a Public Limited Company (PLC).
The full list of legal structures for businesses in the UK is as follows:
- Sole Trader
- General Partnership
- Limited Partnership
- Limited Liability Partnerships (LLP)
- Private Limited Company (Ltd)
- Public Limited Company (PLC)
- Unlimited Company
- Social Enterprise
- Unincorporated Association
- Offshore Company
Register with Companies House if you need to
Some businesses are required to register their venture with Companies House. This often includes having a unique name for your business – if you’re a sole trader, you can just use your own name for this. The Company Name Availability Checker will help you to discover whether your business name is available and can be used. If not, you will be required to think of an alternative name.
You’ll also require a registered UK address for your business’ headquarters. This must remain in the same region but the address itself can change, such as if you were to expand your head office. Limited companies require a director, so their name must be listed on Companies House also. Additionally, there needs to be at least one shareholder present on this document; this can be your director or somebody else. The Memorandum of Association must then be signed by each of the initial shareholders.
You must register with HMRC for tax obligations
Every business within the UK is required to register with HMRC for tax purposes – these must be submitted by the business each year in the form of a tax return. Companies must register themselves to pay Corporation Tax, unless they are a sole trader or within a partnership; their taxes would be paid on business profits.
Corporation Tax is deducted at a rate of 20% on profits and excludes any given allowances or relief. If a business has an annual turnover of more than £83,000, then they are also required to register for VAT.
Be excited for change
Starting a new business venture can be a challenging, yet exciting time for many – especially those who are looking to set up their company in a different country. Be sure to do your research and have knowledge at your disposal to make the start-up process easier, you might even need to refer to this information at a later date. Be proud of your venture and don’t forget to ask questions or turn to support where needed.
About the Author
Dipesh Shah is Corporate Immigration Partner at JMW Solicitors and was responsible for establishing the firm’s immigration department in 2019. Over the last three years, Dipesh has grown the JMW Solicitors’ immigration offering into a highly trusted and respected force within the industry. Along with his team, he has helped hundreds of clients overcome legal hurdles to secure their right to live, work and invest in the UK.