How to set up a business in the UK as a non resident

How to set up a business in the UK as a non resident

The UK business sector is continuously thriving, and this is particularly true for SMEs. In 2017, small to medium sized businesses account for 99.9% of the total 5.7 million private sector businesses, employing 16.1 million people. Considering these figures, it’s no wonder many non-UK residents are looking to set up their business on UK soil.

Although there are a series of challenges for non-residents, setting up your business in the UK can offer the opportunity to reach more than 500 million potential customers across Europe, and build a path to global success. Firstly, you’ll need to follow these steps: 

1: Consider which visas you require

Working visas, which may be required for you to open a business in the UK, are determined by your nationality. EU citizens do not currently need special permission to start a business in the UK, and EEA nationals can live and work freely in other EEA states.

Those who have acceded the EU however (such as Bulgaria and Romania) may have to apply for permission, unless you qualify for exemption. Brexit may also change this, with the UK likely to abandon the principle of freedom of movement. Any advice about exemptions, as well as guidance for applications, can be found on the UK Border Agency website.

Those outside the EU may have to apply for a work visa before opening a business in the UK. The UK has a number of different visas depending on your circumstances, and include options for investors, entrepreneurs, graduate entrepreneurs, representatives of overseas businesses and a general work visa.

Immigration authorities tend to favour prospective entrepreneurs for visas, and use a points-based system with several tiers:

  • Tier 1 – highly skilled workers, investors and entrepreneurs
  • Tier 2 – skilled workers
  • Tier 3 – unskilled workers
  • Tier 4 – adult students
  • Tier 5 – temporary workers

The UK Border Agency recognises tier 1 applicants as having a means to ‘set up, take over, or actively be involved in running one or more businesses in the UK’.

Entrepreneur visas

The Tier 1 entrepreneur visa is for those who’d like to set up a business in the UK. You should apply for the visa three months before you travel, although the average turnaround is closer to three weeks. This visa will be valid for a maximum for three years and four months, and you can apply to extend it for another two years. You can also apply for settlement once you’ve been in the UK for five years. There are however a few requirements to abide by:

  • Must have access to at least £50,000 in investment capital or already invested this sum 12 months prior to your visit
  • Must meet the English Language requirement
  • Be at least 16 years old
  • Be able to support yourself during the stay

If you’d like to apply for an extension to the existing Tier 1 entrepreneur permit, there are a few other requirements:

  • Must have invested at least £200,000 in a UK business, excluding any commercial property or director’s loan
  • Must be involved in running the business in the time of applying
  • Must have registered either as a director of the company with Companies House or as a self-employed individual with HM Revenue and Customs

Graduate entrepreneur visas

The graduate entrepreneur visa is for graduates who have been endorsed either by the Department for International Trade (DIT) as part of the elite global graduate entrepreneur programme (Sirius), or a UK higher education institution (HEI) for a strong business idea.

The nature of your endorsement will determine how long the visa takes. If it was by DIT, you should get a decision in three weeks, and can apply three months before you travel. If it was by HEI, the decision will be within eight weeks, and can also be applied for three months prior to travel. This visa will last for one year, and can be extended by a further year.

DIT requirements:

  • A degree qualification recognised as equal to UK’s bachelor degree
  • Endorsement from DIT issued in the past three months
  • Must meet the English language requirement
  • £945 in savings if applying from the UK, or £1,890 if applying from outside the UK – must be in your account 90 days prior to applying

HEI requirements:

  • A UK-recognised bachelor’s degree, master’s degree or PhD awarded before your date of endorsement
  • Endorsement from HEI issued in the past three months
  • £945 in savings if applying from the UK, or £1,890 if applying from outside the UK – must be in your account 90 days prior to applying
  • Meet the English language requirement
  • Must have permission to remain in the UK from your financial sponsor if they’re an international scholarship agency or government. They must also have paid course fees and living costs in the past 12 months

2: Choose your company’s legal structure

Once you’re eligible to live and work in the UK, you must next decide on the company’s structure. There are several forms of company structure for foreign investors in the UK including private limited company (Ltd), public limited company (Plc), branch of a foreign company and limited liability partnership.

Private limited company (Ltd)

A private limited company is a legal entity in its own right, and most popular with foreign investors. A Ltd requires:

  • One shareholder, which is ideal for wholly-owned subsidiaries
  • No minimum capital
  • Minimum of one director and a company secretary
  • Accounts to be filed annually

Public limited company (Plc)

As opposed to a private limited company, a public limited company is able to offer its shares to the public, making it the structure of choice for larger, established businesses. A Plc requires:

  • Minimum share capital of £50,000
  • At least 25% of the share capital must be paid up
  • A minimum of two directors and a company secretary
  • Financial statements to be audited if turnover exceeds £1 million

Branch

A branch is a division of a parent company which conducts its own business, for instance a regional branch may take orders and do business without referring back to HQ. Branches require:

  • The foreign parent company to be responsible for all liabilities of a UK branch
  • Registration with Companies House
  • The parent company accounts to be filed annually

Limited liability partnership

Limited liability partnerships (LLPs) are suitable for businesses of all sizes, and are increasingly being used for joint ventures. This structure sits between a traditional partnership and a limited company. LLPs require:

  • At least two members, each with a limited liability
  • The same registration and disclosure requirements as a limited company

3: Register the business

Before registering your business, you’ll need to decide on a company name. The business name needs to reflect your product and service, and not be in use by any other business. You can check if the company name is already in use using our name checker. The next step, if you’d like an online presence would be to purchase a domain with your brand name.

Once these steps are put in place, you can register with Companies House, a process known as incorporation. To register, you’ll need the following:

  • Suitable company name
  • Address for the company
  • At least one director
  • At least one shareholder – and details of company’s shares
  • To check the SIC code – which identifies what your company does

Once you’ve gathered all the information, you can either send it to Companies House for approval or contact a company formation specialist who can do all the paperwork for you.

4: Register for tax

Generally, most companies can register online for corporation tax and PAYE as an employer, at the same time as registering with Companies House. You’ll be required to register for corporation tax within three months of commencing business, which includes buying, selling, advertising, renting a property and employing people.

Before registering, you’ll require your company’s 10-digit Unique Taxpayer Reference (UTR). This should be posted to your company’s address by HM Revenue and Customs (HMRC), usually within a few days of your business being registered with Companies House.

To register, you’ll need to tell HMRC:

  • Your company’s registration number
  • The date you started to do business (your company’s first accounting period will start from this date)
  • The date your annual accounts are made up to

HMRC will then inform you of the deadline for paying corporation tax. You’ll then need to file regular company tax returns – even if you make a loss or have no corporation tax to pay.

5: Open a UK bank account

The city of London is one of the world’s foremost financial centres, and banks from most countries have offices here. If you’re setting up a business in the UK as a non-resident, there is the option to use your foreign bank account. However, having a UK bank account will make it easier to conduct trade and to complete transactions.

The process for opening a UK business bank account is practically the same for all banks, and namely involves the submission of personal and company information. You’ll require two documents: one to prove your identity (such as a passport or UK driver’s licence) and the other to prove your business address.

Interested in opening a UK business as a non-resident? Contact us for more information.

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