Starting a business in the UK

The UK’s economy is one of the largest and most dynamic in the world, ranking as the sixth biggest by gross domestic product (GDP) globally.. The country is a major draw for foreign businesses that want to access a mature and stable market. The Organisation for Economic Cooperation and Development (OECD) forecast the UK’s GDP growth to increase by around 1.2% in 2026 and pick up slightly to 1.3% in 2027.

London is the leading centre for technology, finance, professional services, and creative industries. For manufacturing and logistics, the Midlands, the North of England, and regions close to major ports and airports are often attractive.

Other cities such as Manchester, Birmingham, Bristol, Edinburgh, and Leeds offer compelling combinations of sector specialisation, labour markets, and cost efficiency.

With the necessary documents ready, your business registration can be completed swiftly. This efficiency is further supported by the absence of a minimum capital requirement for private limited companies.

The UK's regulatory framework also accommodates the needs of different businesses. For instance, while it is necessary to appoint at least one director, this individual does not need to reside in the UK or hold UK citizenship. Appointing a local director, however, can be advantageous – especially when dealing with banking applications.

Directors are now required to complete identity checks, either directly with Companies House or through an authorised corporate service provider (ACSP) – Hawksford is a registered ACSP so we can assist. This is something you’ll need to factor into your UK incorporation and governance planning.

We also recommend appointing a professional company secretary – particularly for foreign-owned entities – to ensure smooth governance and efficient management of all statutory filings and records. Our team can provide this support as part of your UK company incorporation, helping you maintain full compliance from the start.

In April 2023, the UK’s corporation tax rate rose from 19% to 25%, which is slightly above the global average. As of the UK Budget 2025, the government is committed to maintaining it at this rate.

While the UK is not a low-tax jurisdiction, it remains competitive for capital investment due to full expensing, which allows you to either deduct the full cost or claim a 50% first-year allowance on qualifying plant and machinery. Assets must be new and unused, and bought from 1 April 2023, to be eligible.

The 19% corporation tax rate remains applicable to companies with profits of no more than £50,000. Marginal relief is also available to companies with profits between £50,000 and £250,000.

If you’re operating across borders, double taxation may be a key concern. To support businesses, the UK has an extensive network of double taxation treaties ensuring income is only taxed once. These agreements cover more than 100 countries, including China, France, Italy, Belgium, Canada, the United States, Ireland, and the Cayman Islands.

No matter where you choose to do business, success may depend on the strength and reliability of the country’s infrastructure. In the UK, this is not only well-established but also continually improving.

For instance, the High Speed 1 (HS1) rail line, which connects London to the Channel Tunnel, has transported over 200 million passengers since its launch in 2003. What’s more, the UK's extensive rail, port, and airport infrastructure ensures the efficient movement of goods and people domestically and internationally.

The UK is the birthplace of more than 100 unicorns – innovative companies valued at US$1 billion or more. This exceeds the combined total of unicorns in France, Germany, and the Netherlands. Looking ahead, the government aims to establish the country as a global hub for innovation by 2035. This commitment means that innovative businesses in the UK can expect continued support.

Currently, businesses can contact the UK’s dedicated agency, Innovate UK, for funding, advice, and training programmes. There are also tax reliefs and incentives for research and development (R&D) work.

The UK ranks among the most educated nations globally, with a high literacy rate and a significant percentage of its population receiving tertiary education. The country is home to four of the top ten universities in the world, including Imperial College London and the University of Oxford.

Besides producing talent, there are also resources and avenues in the UK for upskilling. For a quick overview of the advantages of starting a business in the UK, watch the video below:

From a regulatory perspective, the UK is pro-business but not light touch in every area. Sectors such as financial services and manufacturing are subject to dedicated regulators and regimes. These sector rules are important to be aware of when starting a business in the UK and must be assessed early in your planning process.

In financial services, for example, most regulated activities require authorisation from the Financial Conduct Authority and, in some cases, the Prudential Regulation Authority. This applies to banking, insurance, investment services, payments, and consumer credit.

Technology and telecoms businesses may need to engage with Ofcom, while all companies handling personal data must comply with the UK General Data Protection Regulation (UK GDPR) and register with the Information Commissioner’s Office (ICO) where required.

Construction, manufacturing, and product-based businesses also face planning, safety, environmental, and product-standards requirements, including the UK Conformity Assessed (UKCA) marking regime.

Tax residency is important to think about early, as it affects where your company pays tax and what UK filings you may need to make. By default, if a company is incorporated in the UK, it will be treated as UK tax resident. That usually means it falls within the UK corporation tax system.

As mentioned earlier, the UK currently has a main corporation tax rate of 25% for larger profits, as well as a wide double tax treaty network.

One further advantage to note is that the UK does not levy withholding tax on dividends. Once profits have been taxed at company level, they can be paid as dividends to a foreign parent without additional UK tax. The tax treatment then depends on the laws of the parent’s jurisdiction.

The formation of a limited company is the preferred route for overseas companies looking to do business in the UK. According to Gov.UK, private limited companies have accounted for more than 95% of entities recorded on the register for the last ten years.

As a separate legal entity, a limited company is accountable for its own debts, independent of its owners. This separation offers significant legal protection as the personal assets of the company’s shareholders are generally shielded from business liabilities.

The formation of a private company limited by shares is a particularly favoured option. Operating as a private limited company allows for a single shareholder, who can also act as the director, to start the business. There is no statutory limit on the number of shareholders, making it suitable for both small startups and larger ventures.

Additionally, if the business grows and meets certain criteria, it can later be re-registered as a public company, offering further opportunities for expansion and investment.

Timeline for starting a UK limited company

The process of registering a UK private limited company typically takes two to three weeks, but it can be done faster if needed.

UK limited company incorporation process

The steps for forming a limited company in the UK are as follows:

1. Selecting your company name

Your company must have a unique name which complies with Companies House rules. It must end with “Limited” or “Ltd” for a company limited by shares and must not be identical to an existing name on the register.

2. Determining directors, shareholders, and company secretary

You must have at least one director, who is a natural person, and at least one shareholder to set up a limited company. The same person may hold both roles. There is no requirement for a director to be a UK national or resident.

At this stage, it is helpful to identify those who will be recorded as persons with significant control (PSCs), also referred to as beneficial owners that hold more than 25% of shares or voting rights.

Under the newer identity verification regime, directors and PSCs must complete verification either directly with Companies House or via an authorised agent. This typically involves providing passport details and completing an electronic verification process – all of which should be considered in your business registration timeline.

3. Arranging the registered office

Every UK company must have a registered office address in the UK. This is the address to which official correspondence is sent, and which determines whether the company is registered in England, Wales, Scotland, or Northern Ireland. Hawksford can provide a registered office address where needed.

4. Preparing the constitutional documents

Two documents will make up your company’s constitution:

• The memorandum of association, which records the initial shareholders’ agreement to form the company; and
• The articles of association, which set out your company’s internal rules.

The memorandum can be generated automatically as part of the company formation process. For many trading subsidiaries, the standard model articles prescribed by the UK company law are sufficient.

Where there are requirements such as different share classes, bespoke articles can be prepared to reflect those needs. It is generally preferable to build such features in from incorporation rather than amending the constitution later.

5. Receiving the certificate of incorporation

Once Companies House approves your application, they will issue a certificate of incorporation, which confirms that your company has been formed and is the primary proof document used when opening bank accounts, entering contracts or registering with other authorities.

Branches are typically used by businesses looking to expand into the UK and actively conduct business operations. A branch operates as an extension of the parent company, allowing you to carry out business, sign contracts and generate revenue in the UK.

When you set up a branch in the UK, the parent company will have direct ownership and control over its operations. Since the branch does not have a separate legal personality, your parent company will be fully liable for its debts and obligations.

If your goal is to test the market without conducting revenue-generating activities, you may want to consider setting up a representative office instead. This is typically used for activities such as market research or promoting the parent company but will not be able to engage in direct business operations like selling products or services.

As your business grows and strengthens its presence in the UK, you may choose to transition from a branch to a limited company.

A partnership might be a suitable option if you’re planning to collaborate with others. You may consider a limited liability partnership (LLP) where your partners’ liability is limited to the amount they have invested in the LLP.

An LLP requires at least two partners, who can be individuals or corporate entities, giving you flexibility in how you structure your partnership. There is no statutory upper limit on the number of partners. You can also have designated and non-designated partners, allowing you to assign different levels of involvement and responsibility based on what works best for your UK business.

Additionally, an LLP is tax-transparent, meaning that the partnership itself does not pay tax – the individual partners are taxed based on their share of profits instead. This structure can be particularly advantageous if the LLP has no UK-resident partners or activities in the UK, as income may not be subject to UK taxation. This makes it an attractive option for partners based in low-tax jurisdictions while simultaneously giving you the benefit of access to the UK's robust legal framework and sophisticated company law infrastructure.

As part of your business’ registration, a written agreement will need to be drafted to guide how the LLP will be managed, including profit distribution and decision-making processes.