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What makes the United Kingdom (UK) such an ideal location to incorporate your business? We guide clients in the formation and administration of companies, trusts, foundations and partnerships, providing a wide range of administration, director and secretarial services for your operational and transactional needs.
Despite Brexit, the UK remains one of the most important European consumer markets and of one of the top countries attracting foreign direct investments (FDI). London remains the financial capital of Europe, home to the European headquarters of almost 60% of companies in the Fortune 500 ranking. According to the World Bank's 'Doing Business 2020' ranking, the UK ranked 8th out of 190 economies, gaining a position compared to the previous year.
In the Institute of Management Development (IMD)'s 2020 World Competitiveness Ranking, the UK climbed from 23rd to 19th in 2020. The UK was ranked 20th on the business efficiency measure, compared to 31st in 2019. One of the main strengths of the UK economy in attracting FDI is that its economy is one of the most liberal in Europe, while its business environment is extremely favourable.
The UK is a large and dynamic marketplace in its own right, but also benefits from being an excellent gateway to other parts of the world. Foreign investors coming to the UK can experience its many advantages, which include:
The UK's corporate tax regime also has a number of attractive features:
The UK is considered to be an excellent jurisdiction for international holding companies for many reasons, including the following:
There is no capital gains tax on the disposal of a 'substantial shareholding' in a trading company or a holding company of a trading group or a sub-group.
A substantial shareholding is a holding of at least 10% of the ordinary shares in another company that have been held for a continuous period of at least 12 months in the six years preceding the sale.
A trading group is a group where one or more of the members carry on trading activities, and the activities of those members taken together do not include a substantial component of nontrading activities, which means that such non-trading activities should not form more than 20% of the total turnover within the group.
For disposals on or after 1 April 2017, the requirement that the company being disposed of remains a trading company (or holding company of a trading subgroup) immediately following the disposal will no longer apply unless the disposal is to a related party.
Further, there is a relief for disposals of shares in companies which are materially owned by qualifying institutional investors (‘QIIs’).
Research and development (R&D) reliefs support companies that work on innovative projects in science and technology. They can be claimed by a range of companies that seek to research or develop an advance in their field. They can even be claimed on unsuccessful projects.
There are different types of R&D relief, depending on the size of your company and whether or not the project has been subcontracted to you.
You can claim SME R&D relief if you are an SME with:
Large companies can claim a research and development expenditure credit (RDEC) for working on R&D projects.
It can also be claimed by SMEs and large companies that have been subcontracted to do R&D work by a large company.
A tax credit is available, equivalent to 13% of the qualifying expenditure. This can be recognised as a taxable item above operating profit in a company’s financial statements, with the net amount of 10.5% payable to the company.
The principal ways for a foreign investor or company to carry on business in the UK are as follows:
The overseas company retains ownership and control of the branch. The branch will not have a separate legal personality, so the overseas parent company is liable for the debts and obligations of the overseas establishment.
A branch is often a favoured option for overseas businesses in the early stages of international expansion. Once a solid business presence has been established, branch activities are usually transferred to limited companies.
Need help setting up a branch company? Contact our expert team.
A limited company is a separate legal entity with its own limited liabilities. This is much more substantial than a branch and offers greater assurance for customers and others who come into contact with the business.
Overseas companies establishing a limited company in the UK may do so by setting up a subsidiary. The overseas company, as the parent company, will have complete ownership and therefore control of the English subsidiary. The most popular corporate vehicle is a private company limited by shares.
Advantages of private limited companies are:
Limited liability partnerships (LLPs) are separate legal entities and must have at least two members, which can be natural persons or body corporates, and at least two designated members.
The activities of the LLP are treated as carried out by the individual partners, so the individual partners are separately subject to income tax on their share of the profits or losses of the LLP.
Profit cannot be retained in the same way as a company limited by shares. This means all earned profit is effectively distributed with no flexibility to hold over profit to a future tax year.
The UK is a flexible and business-minded location, historically recognised as a well-established and reputable jurisdiction to conduct business.
The UK’s position, both geographically and in respect of business culture, put it at the centre of a diverse collection of markets and sectors. Its open market and diversified economy present opportunities for new investors to access a domestic market and to use the location as a gateway to the rest of the world. The UK remains one of the most attractive places in the world to invest in and trade with.
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Director, Corporate Services
Steven provides a wide range of services to the financial services sector ranging from FCA application sign off, providing a totally outsourced back office support function for such entities, acting as FCA auditor and providing tax and financial planning advice on a proactive basis.
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