The UK is an increasingly attractive option for overseas businesspeople with dreams of setting up a company in a new country. Indeed, in 2024 and 2025, the UK is poised to take advantage of a considerable boost in business optimism, partially due to lower interest rates and the election of a progressive new Labour government. The UK offers a robust and business-friendly environment, but it is important to understand the legal and administrative steps involved in establishing a business here. If you are considering relocating to the UK to set up a new commercial venture, this article is for you. In this article, we will explain how to set up a company in the UK, including the different types of business structures and the immigration routes available to foreign national entrepreneurs.
Opening a branch Office in the UK
Opening a branch office in the UK is a popular option for foreign nationals with an existing business who want to establish a presence in the British market. Before you consider setting up a branch office here, it is important to carry out the necessary research and be confident that your existing company will translate to the UK marketplace.
A branch office operates as an extension of the parent company and must comply with UK regulations. You must register your company with Companies House if you set up a place of business or if you usually carry out business from somewhere here. You will also need to appoint a UK representative who will act as a link between the branch and UK authorities.
To register your branch office with Companies House, you will need to fill out and submit form OS IN01 (‘register a UK establishment of an overseas company’) and send it to Companies House within 1 month of opening. You will also need to pay a registration fee of £71 with the form. You can be paid by cheque or postal order.
Once you have registered your company with the registrar, you have a legal duty to keep them informed of any changes to your business within 14 days. This includes any changes to your company name or address, purpose, details of directors, secretaries or people authorised to represent the company, company information, or company constitution.
Choosing the right business structure
One of the first decisions you will need to make when starting a company in the UK is which business structure to use. The main types of business structures in the UK are:
- Sole trader – This is the simplest form of business structure in the UK and is ideal for self-employed individuals starting small businesses. There are minimal levels of business administration, and the setup process is very straightforward.
- Business partnership – Partnerships are suitable for businesses run by two or more individuals. With this arrangement, partners share any profits, risks, costs, benefits and responsibilities of running an organisation. It is also important to remember that each partner is liable for the actions of the other, including acts of negligence.
- Limited Company (Ltd) – This is one of the most popular business structures in the UK. Owners and directors benefit from limited liability, meaning that they are only personally exposed to the debts of the company up to the nominal value of their shareholding. The downside of this type of business is the higher levels of business administration and regulation.
- Limited Liability Partnership (LLP) – Combines elements of partnerships and limited companies.
- Branch office of an overseas company – A UK-based extension of an overseas company.
Each structure has distinct advantages and legal implications. While it is possible to switch to a different business structure in the future, doing so can be time-consuming and confusing for clients and suppliers. This is why it is best to start off with the right type of business structure based on where you expect it to be in the future.
Registering your company in the UK
Limited companies and Limited Liability Partnerships must be registered with Companies House (the official registrar of companies in the UK). The steps involved in registering a limited company are as follows:
- Choose a company name – Your business name must be unique and adhere to UK naming regulations (e.g. it must not contain certain sensitive words such as ‘royal’). We recommend checking the rules for company names, the name you want is available, and any existing trade marks.
- Choose your directors and company secretary – You must appoint at least one director, but you do not have to appoint a company secretary. We recommend checking what directors are responsible for and who can be a director or company secretary.
- Deciding on your shareholders or guarantors. We recommend checking if you will need to issue shares or set a ‘guaranteed amount’ and how dividends from shares are taxed.
- Decide if you will have any people with significant control (PSC) over your company, i.e. anyone with voting rights or more than 25% of the shares.
- Draft your incorporation documents – For a limited company, you will need to prepare a Memorandum of Association and Articles of Association.
- Check the company and accounting records you will need to keep
- Register your limited company with Companies House – This can be done online or by post. You will need to provide an official address and choose a SIC code to identify what your company does. You will also need to provide at least 3 pieces of personal information about yourself and your shareholders or guarantors. The application costs £50.
Once your application has been received by Companies House, your company will normally be registered within 24 hours. After registration, you will receive a Certificate of Incorporation confirming your company legally exists.
Understanding legal requirements
Understanding the legal obligations of a company in the UK will ensure that you remain compliant and avoid any penalties or fines. Depending on your type of business, you may need to consider the following legal requirements.
- Business licenses and permits – Depending on your industry, you may need specific licenses or permits to operate legally in the UK
- Data protection regulations – If you hold data on your clients, you may need to comply with the UK’s data protection laws (i.e. General Data Protection Regulations (GDPR))
- Health and safety laws – It is essential that your workplace adheres to health and safety regulations.
- Immigration laws – you must carry out right-to-work checks on all employees and hold a valid business visa at all times.
It is advisable to consult with legal experts to ensure full compliance with UK laws.
Setting up business banking
Opening a business bank account will allow you to receive money, pay bills, pay staff, apply for loans, manage your taxes, meet your accounting obligations, and carry out any other banking-related tasks for your business. To set up a business bank account in the UK, we recommend researching the various banks available here to find one that suits your business needs. It is advisable to wait until you are in the UK to open a business bank account. The bank will want to see evidence of your identity, business address, and incorporation documents.
Managing Taxes and Accounting
When it comes to managing taxes and accounting for your company in the UK, we recommend taking the following steps:
- Register with HMRC – Depending on your business, you may need to register for Corporation Tax, VAT, PAYE (if you have employees), and self-assessment.
- Keep accurate records – Keep detailed financial records for at least six years. This includes invoices, receipts, bank statements, dividend vouchers, asset purchases, loans, and any other financial transactions.
- Hiring an accountant – An accountant will help manage your finances and ensure compliance with tax laws.
Hiring Employees and Understanding Employment Law
Hiring employees requires an understanding of UK employment law. It is important to understand your legal obligations to provide an employment contract outlining terms and conditions. You must also carry out right-to-work checks to ensure that employees have the legal right to work in the UK.
Crucially, you must also ensure your compliance with employment laws. This means adhering to wage, working hours, employee benefits, and health and safety regulations.
An HR expert or employment lawyer can help ensure compliance with UK employment regulations. In addition, your UK accountant will ensure that you deal with PAYE (pay as you earn) and national insurance correctly on behalf of your staff.
Exploring the Global Business Mobility Route
The main purpose of the Global Business Mobility immigration route is to facilitate the movement of overseas skilled workers to support UK operations.
- Expansion Worker visa – For overseas businesses that wish to send an employee to the UK to set up a new branch or subsidiary here.
- Senior or Specialist Worker visa – For overseas employees transferring to a UK branch.
- Graduate Trainee visa – For employees on a graduate training programme.
- Secondment Worker visa – For overseas employees seconded to the UK as part of a high-value contract.
- Service Supplier visa – This is for overseas businesses with a contract to provide services for a UK company.
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.
Self-Sponsored Visa: A New Path for Entrepreneurs
The Self-Sponsored Visa offers a new flexible path for overseas entrepreneurs looking to set up a company in the UK. This route avoids the need for visa applicants to find employment (i.e. a sponsor) in the UK. Instead, applicants set up their own company in the UK, apply for a sponsor licence, sponsor themselves, and then apply for a Skilled Worker visa. This option is extremely attractive to those in roles such as consultancy who would prefer to be self-employed and control their own business venture in the UK.
Another benefit of self-sponsorship is that it provides a pathway to permanent settlement after 5 years of continuous residence here.
Developing a business plan and strategy
Drawing up a comprehensive business plan and strategy will be crucial for your company’s success in the UK. A well-thought-out business plan will also help you to secure funding and guide your company’s growth. We recommend carrying out detailed market research to fully understand your target market and competitors. Your business plan should also include financial projections, a marketing strategy setting out how you will promote your business and attract customers, and an operational plan setting how your business will operate on a daily basis.
Final words
We hope you have found this guide to setting up a company in the UK helpful. By doing your homework in the early stages and getting advice and guidance from specialists in the world of business, including immigration Solicitors, accountants, and business advisers, you will be able to establish a successful business presence in the UK with ease. We wish you all the best with setting up your new company in the UK.
