Company formation in UK is a process that follows a few key steps,depending on the chosen business form: sole trader, limited company or partnership in most cases. All companies are required to go through the UK company registration process and will need to have licenses or permits, as well as business insurance in some cases.
| Quick Facts | |
|---|---|
| Types of companies |
– private company limited by shares (Ltd), – public company limited by shares (Plc), – company limited by guarantee, – community interest company, – charitable incorporated organization, – co-operative society |
|
Minimum share capital for company formation in UK |
– no minimum capital for the Ltd; – £50,000 for the PLC |
|
Minimum number of shareholders |
1 |
| Number of directors | 1 |
| Local director required for company formation in UK (Yes/No) |
No |
| Mandatory steps for company formation |
– choose a company name, – decide on the shareholding structure, – appoint the company director, – prepare the documents, – register the company with the Companies House and for Corporation Tax |
| Residency requirements for foreign company owners | No |
| Time frame for the incorporation (approx.) |
– 1 business day for online registration, – 8 to 10 days for post applications to the Companies House |
| Corporate tax rate |
25% |
| Dividend tax rate | 0% in most cases |
| VAT rate in UK |
– 20% standard rate, – 0% and 5% reduced rates |
| Number of Double Taxation Treaties in the UK (approx. ) |
130 |
| Annual accounting/filing requirements in the UK | Yes |
| Special licenses for company formation in UK |
Yes, industry-specific |
| Tax exemptions or incentives |
A dividend tax exemption applies in case of most distributions. A tax deduction is available for certain R&D expenditure in case of small and medium companies. A patent box regime and creative industry tax reliefs apply. |
Table of Contents
Starting your UK business
The process for UK company formation for a non-resident is the same in terms of registration and there are no rules requiring foreign company directors or shareholders to become residents. A London UK lawyer from our team can provide you with more information about particular laws about company formation in UK.
We invite you to read below to find out more about the basic business forms and the main requirements for company formation in UK. Foreign investors who need local assistance and representation for their business can also rely on the services provided by our lawyers. We are also able to assist those who wish to register a company in the UK but are unable to remain in the country for the entire duration of the process.
A lawyer in the UK from our team can answer any questions about corporate law, business immigration, commercial law, or data protection and privacy law. We can just as easily assist individuals who have questions about immigration, employment, or family maw matters in the UK. You can reach out to us as soon as you are in need of legal guidance and advice. Our team will answer your questions.
Form a company in UK with our help
Company incorporation in the UK is done by following a number of mandatory steps. The requirements for UK company formation depend on the chosen business form. Therefore, starting your own business in the UK begins with deciding on issues such as the actual level of liability, as well as the amount of the initial investment.
Setting up a sole trade is simpler and for some entrepreneurs, it can be their first step. However, one should note that he is personally responsible for the business’s debts when choosing this business form.
In the partnership, 2 or more people share responsibility for the business’s debts and also its profits. If these two simpler business forms interest you, our lawyers can assist with company formation services in UK.
The steps required to set up a company in the UK, in case of the limited company, the main steps are listed below:
- Choose the form: this type of company can be limited by shares or limited by guarantee; the first one has shares and shareholders and the latter has guarantors and the guaranteed amount;
- Choose the company name: for company formation in London, as well as in any other part of the UK, the desired company name needs to be available for use; our team can help you register a business name UK;
- Choose the relevant parties: the directors and the company secretary, or the guarantors, as needed;
- Register the business: this step is essential for company formation in UK and it is performed with the Companies House.
As part of the company formation process you will also need to identify those individuals that will act as people with significant control (PSC) within the company. These are persons who own more than 25% of the company’s shares, or who have voting rights.
We invite you to watch a short video about the company setup phases:
Company formation in the Isle of Man follows similar steps, however, if you wish to incorporate there, you are advised to seek special assistance from our attorneys. Our team of lawyers in London can provide special assistance for a non-resident with bank account who wishes to open a business.
Entrepreneurs who register a company in UK will need to appoint a director upon company formation, however, the appointment of a secretary is not mandatory. After you open a company in UK you will need to keep specific records about the business including details about the directors and shareholders, the outcome of the applicable shareholder resolutions, debentures and indemnities, transactions, loans, and mortgages.
Starting a business in the UK as a foreigner will abide by the same rules for corporate document preparation and record keeping. When the company’s records are kept at another location, it is mandatory to send a notification to the Companies House. After you set up a company in UK, you will need to report any changes to the company, as part of the responsibilities for running the limited company. These changes include having a new registered address in the UK< when you appoint an accountant or tax adviser or when the owner of the business changes his or her particulars. Other changes are also notified to the Companies House.
For those who are interested in UK company formation for a non-resident, we offer solutions through a power of attorney, as needed. Those interested in opening a company abroad, such as in Malta, should know they can rely on local company formation agents to open companies on their behalf as they don’t have to travel to that country for company incorporation.
Conditions for company names in the UK
Investors should be aware of several essential rules during the course of company formation in UK. Some of these refer to the company name one chooses for its future business. There are some clear rules on what names may be used, and the founder(s) will also be asked to always check if their specially selected name is available.
Our lawyer in London summarises some of the most important company name rules below:
- the name cannot be “same as” – this means that those names that are too common cannot be used – this is only possible when the company for which the name is registered is part of the same company group or when a written confirmation of no objection is provided by the company that had the name initially;
- the name cannot be “too like” – an already registered company can submit a complaint that a newly registered name is too alike; in this case, the Company House contacts the applicant and offers more information on the situation;
- the company name cannot be offensive;
- the name cannot suggest a connection with the government or the authorities, if this is not approved;
- the name cannot contain certain sensitive words or expressions.
If you want to open a company in the UK, the legal entity’s trade name can be different from the registered name. The former is also known as the business name, however, company owners will also need to consider if this name is not already trademark-protected.
Different rules for names apply in the case of partnerships and sole traders. Our lawyer in England can give you details upon request.
Once the name is selected, registered, and in order, and the company is registered, the business will need to observe the rules for displaying its name. This includes a sign that shows the company’s name at the registered company address and at other addresses where the business operates (if applicable). No signs are needed on display when the business is run from home.
Corporate compliance in the UK
Investors interested in starting a company in UK are not only concerned with the incorporation steps, but also with the subsequent compliance requirements. The mandatory submissions and filing requirements are lighter for the simpler business forms, such as the sole trader. Corporations are required to observe more complex requirements.
Our lawyers specializing in company incorporation in UK list the main taxes applicable to a corporation:
- Corporate income tax: with a standard rate of 25%; in other countries, such as Argentina, this tax is higher (can reach 35% for different brackets of earnings)
- Surcharge: an additional 3% tax applies in case of banking companies or groups in excess of GBP 100 million;
- Value added tax: a standard rate of 20% applies for most types of goods and services; reduced rate of 5% is in place for certain types of goods or services and some are zero-rated;
- Social security contributions: 12% for the year 2023/24 paid by employers in most cases (for weekly income between GBP 242 and GBP 967); additional rates apply according to the employees’ weekly income;
- Other taxes: the digital services tax of 2% for large businesses that offer a social media platform or UK online marketplace (and in other cases), the tonnage tax (available to shipping companies instead of the corporate tax), or the annual tax on enveloped dwellings.
As far as the annual reporting requirements are concerned, investors who open a company in UK will need to observe the following:
- the accounting period is typically 12 months;
- the corporate tax return is filed for the 12-month period;
- companies file separate tax returns based on a self-assessment regime; this is done within 12 months of the end of the accounting period;
- a fixed penalty of GBP 100 applies for failure to file the tax return within the due date; an additional GBP 100 is applicable in other cases;
- companies file annual financial statements and observe the UK GAAP principles;
- the company records are kept for 6 years from the end of the last financial year or longer in some cases;
- companies are required to register for VAT purposes (for the years 2021/22 and 2023/24) when their taxable supplies exceed GBP 85,000 in the previous 12 months or when it is expected that this threshold will be exceeded in the following 30 days;
- VAT returns are usually filed on a quarterly basis.
Company directors in the UK are the ones liable for disqualification or fines if they fail to keep the proper accounting records. If you want to start a business in UK, our lawyers can give you more information about the applicable tax laws, as well as the double taxation agreements.
Statistics of company formation in UK presented by our team
Are you interested in company formation in the United Kingdom? The number of investors who chose to form a company in UK increased, according to data released by the Companies House. Company formation in London remains a popular choice amongst investors and the overall number of companies registered at the end of March 2021 was highest in England and Wales (4,408,528).
Company formation in the Isle of Man is also a preferred choice, given the tax neutrality options available to investors.
Our team lists key data on UK company formation below:
- At the end of March 2024, there were 5,350,759 companies on the total register in the UK (this number also includes companies in the course of dissolution/liquidation); the number of companies on the effective register in March 2024 was 4,876,374;
- There were 244,717 incorporations during the first three months of 2024;
- The total number of companies incorporated between January and March increased by 22,649 entities, compared to the same period in 2023;
- The number of dissolutions during the first three months of the year decreased by 2.3% compared to the same period in 2023.
If you are interested in more information about registrations with the Companies House, as well as details on if you are a non-resident with bank account in the UK who wishes to invest, we can assist you.
Company formation in UK is easier with our help, whether you are a UK citizen or resident or a foreign national looking for investment options in London or other cities. Contact us for complete company formation services in UK. We offer services in Wimbledon and many other areas.
