For many overseas entrepreneurs, the United Kingdom offers the perfect place to set up a new business enterprise. With its robust economy, pro-business laws and policies, a plentiful supply of investment capital, a modern transport and communication network, and availability of highly skilled professionals, it is easy to see why. If you are contemplating moving to the UK to set up a new business in 2024 or beyond, this article is for you. Here, we explain who can set up a business in the UK, the business culture, the business structures available, how to start a business in the UK and how to obtain a business visa in the UK. For more information on the range of business visas available to overseas entrepreneurs, please speak to a member of our business immigration law team.
What is the business culture in the United Kingdom?
Traditional bowler hats, umbrellas, and year-round formal wear no longer apply in the UK. Smart casual clothing is now the norm in the British workplace. Many professionals in the UK now work from home, allowing for a more relaxed work/life balance. However, professionalism, punctuality, and clear communication are still highly valued. Additionally, the UK prides itself on high levels of innovation and creativity, making it a vibrant place for new businesses.
Who can start a business in the United Kingdom?
In short, anyone from around the world can start a business in the UK, provided that they meet the legal requirements. The main factors to consider are:
- Whether there is a suitable UK business visa for your needs
- You meet the eligibility criteria for the visa, and
- You are of ‘good character.’
With an Innovator Founder Visa, you can start a brand new business venture as long as it is innovative, unique, viable, sustainable, and has been endorsed by an approved endorsing body. Alternatively, with a Global Business Mobility expansion worker visa, you can start a branch or subsidiary of your existing overseas business. See below for more details on the business visas that are available to you.
Legal structures for businesses in the United Kingdom
One of the first decisions you will need to make when setting up a business in the UK is the type of legal structure to use. Here are some of the options available:
- Sole Trader – A sole trader is the simplest business structure. You run the business as an individual, keeping all profits after tax but also bearing personal liability for any debts.
- Partnership – In a partnership, two or more individuals share responsibility for the business. Partners share profits, losses, and liabilities of the business.
- Limited Partnership – Must have at least one ‘general partner’ and one ‘limited partner’. General partners run all aspects of the business and have unlimited personal liability, while limited partners contribute capital and have the protection of limited liability.
- Limited Liability Partnership (LLP) – An LLP provides limited liability for the debts of the business to all partners. It combines elements of partnerships and companies, allowing partners to share management while protecting their personal assets.
- Private Limited Company (Ltd) – This is the most common form of business structure in the UK. A Ltd company is a separate legal entity from its owners, offering limited liability. It can have one or more shareholders and directors, and its shares cannot be publicly traded.
- Public Limited Company (PLC) – A PLC is similar to a Ltd company but can offer shares to the public. It requires a minimum share capital and stricter regulatory requirements.
- Unlimited Company – Unlimited companies are less common in the UK and involve owners having unlimited liability for business debts. This structure is usually chosen for specific financial or legal reasons.
- Social Enterprise – Social enterprises are businesses with a social or environmental mission. They reinvest profits into their goals rather than distributing them to shareholders.
- Unincorporated Association – An unincorporated association is a group that is formed for a specific purpose, not primarily for profit. It is typically used for clubs, societies, and voluntary groups in the UK.
- Offshore Company – An offshore company is incorporated outside of the UK but can operate within it. It often offers tax advantages and fewer regulations.
We recommend speaking to an accountant, business adviser, or company formation specialist to understand which business structure is best for your needs.
How to start a business in the UK as an expat
It is incredibly easy to start a business in the UK. The main steps are as follows:
- Draft a business plan – to set up a business here, you will first need to write a comprehensive business plan outlining your business goals, strategies, and financial projections. This is essential for securing funding and guiding your business, as well as securing a business visa.
- Check if you qualify for a visa – At this early stage, we recommend ensuring you will qualify for a business visa in the UK. An immigration lawyer can advise on the best visa for your needs and the steps to take to ensure that your visa application will be approved. Specific visas are available for entrepreneurs and business people.
- Apply for your business visa – An immigration lawyer can handle this process for you.
- Decide on your business structure – Choose a legal structure that best suits your business needs. Consider liability, tax implications, and administrative requirements.
- Choose a business name and address – Select a unique name that complies with UK regulations. Your business must also have a registered address in the UK.
- Register with HM Revenue and Customs (HMRC) – Register your business with HMRC for tax purposes. Depending on your structure, you may also need to register with Companies House (this applies to limited companies but not to sole traders).
- Check if there are any additional rules you will need to adhere to – Certain businesses require specific licenses or adhere to regulatory standards. Ensure you comply with all relevant laws.
If you are considering starting up a non-profit company in the United Kingdom focused on social, educational, or charitable goals, you must register with the Charity Commission and adhere to specific regulations and reporting requirements.
How to obtain a business visa in the UK
Business visa applications can be made online on the UK Home Office website. The exact process for obtaining a business visa in the UK will depend on the type of visa you apply for. Each has its own nuances and requirements, as explained below.
Innovator Founder Visa
The Innovator Founder visa is for businesspeople seeking to establish a business in the UK. It requires endorsement from an approved body and a viable business idea. To apply, you will need to:
- Draft a business plan
- Have your business plan endorsed as being unique, innovative, viable, and sustainable by an approved endorsing body in the UK
- Apply for your Innovator Founder visa and pay the application fee
- Submit any documents required to support your application
- Have your identity verified
Self Sponsorship route
The self-sponsorship route enables overseas business people to set up their own business in the UK, apply for a sponsor licence, and then sponsor themselves for a work visa.
To apply, you will need to:
- Set up a business in the UK
- Apply for a sponsor licence for your new business
- Issue yourself with a Certificate of Sponsorship
- Apply for a Skilled Worker visa and pay the application fee
- Submit any documents required to support your application
- Have your identity verified
Wondering if the Self Sponsorship route is right for you? Watch this video, where we untangle the truth and address all the common concerns!
Global Business Mobility Expansion Worker Visa
This visa is aimed at overseas businesses with plans to open a new branch or subsidiary in the United Kingdom. To apply, you will need to:
- Get a Certificate of Sponsorship
- Apply for an Expansion Worker visa and pay the application fee
- Submit any documents required to support your application
- Have your identity verified
Administering your business in the United Kingdom
When it comes to the administration of your business in the UK, you will need to consider the following
- Business banking in the UK – Open a business bank account to manage your finances efficiently. Many UK banks offer tailored accounts for businesses with various features and services. It is best to wait until you are in the UK to open a bank account because you will need to provide evidence of your identity and business address.
- Taxation for businesses in the UK – Make sure you understand the tax obligations for your business, including corporation tax, VAT, and payroll taxes. An accountant can help you with this. It is important to register with HMRC and ensure timely payments and filings.
- Business insurance in the UK – Make sure you have the necessary insurance for your business, such as employer’s liability, public liability, and professional indemnity. This will protect your business from various risks.
- Employing staff when starting a business in the UK – Understand the legal requirements for hiring employees, including contracts, wages, and working conditions. You will also need to register as an employer with HMRC and comply with employment laws.
Support and advice when starting a business in the United Kingdom
There is no lack of organisations providing support and advice for new businesses in the UK, including local chambers of commerce, trade associations, and government agencies. Here are some useful resources
GOV.UK – The UK government’s official website provides comprehensive information on starting and running a business.
HM Revenue and Customs (HMRC) – For tax and registration information.
Companies House – For company registration and legal requirements.
British Chambers of Commerce – Offers support and networking opportunities for businesses.
The King’s Trust – Provides support for young overseas entrepreneurs.
Final words
Starting a business in the UK involves careful planning and meeting all of the legal requirements here. The hard work you put in at the start will pay dividends down the line. By understanding the business culture, choosing the right structure, and securing the necessary permissions, you can establish a successful business in the vibrant UK market. Whether you are new to the world of business or a seasoned entrepreneur, the UK offers ample opportunities for growth and innovation.
Still confused about what visa route to take or unable to find a visa route? Get a free assessment with one of our experts at AY&J Solicitors.
