If you are looking to move your business to the UK or simply expand into new markets, you should be aware of the various tax and business registration requirements that come with such a decision.
As international tax advisers and experts in business registration matters, we can help guide you through this process.
However, as a general outline, here are some of the factors you should be aware of.
How to choose the right business structure
The UK offers several business structures, including sole trader, partnership, and limited company, each with its unique benefits and obligations.
Your choice will influence everything from your tax liabilities to your personal liability and the need for formal notary affirmation.
Sole trader
- You’re subject to Income Tax on profits.
- National Insurance Contributions (NICs) are mandatory.
- You must fill in a Self-Assessment tax return every year.
- You don’t have Corporation Tax obligations.
Partnership
- Partners are taxed individually on their share of the profits, subject to Income Tax.
- Each partner pays NICs on their share of the profits.
- The partnership itself does not pay tax, but it must submit a Partnership Return.
- No Corporation Tax obligations for the partnership as an entity.
Limited company
- Limited companies are subject to Corporation Tax on their profits.
- Directors and employees pay Income Tax and NICs on their salaries.
- Dividends are taxed at the Dividend Tax rate, which is different from Income Tax but corresponds to the same brackets.
- The entity must file a Company Tax Return annually.
- The reporting requirements are more complex when compared to sole traders and partnerships.
A step-by-step guide to business registration
Start by choosing a distinctive name or ensure that your current company name is not already in use.
(You can do that on the Government’s company name checker).
For some business structures, you’ll need to undergo a formal notary affirmation process, which verifies the authenticity of the documents and information you have provided.
Registering with Companies House is the next step, followed by obtaining any specific licenses required for your business operations.
How to register for tax and stay compliant
Upon successful registration, you’ll need to navigate the UK’s tax system.
Registering your business with HM Revenue and Customs (HMRC) is mandatory for tax purposes.
You’ll need to familiarise yourself with various taxes, including Inheritance Tax, Capital Gains Tax, and, if applicable, VAT.
You should speak to one of our tax advisers to understand your tax obligations which are crucial for compliance and your financial planning.
How does social security work in the UK?
Employers in the UK are responsible for contributing to their employees’ National Insurance (our version of social security).
These contributions help fund various benefits, including healthcare and state pensions.
As an employer, understanding your obligations towards National Insurance is vital for compliance and for supporting the welfare of your employees.
You can check your obligations on the Government website, but we recommend discussing this in-depth with an adviser.
In fact, we recommend discussing all the above factors with a qualified and experienced international tax adviser to ensure that you are fully prepared for business in the UK.
Setbacks and delays could prevent you from making money in your first months and should absolutely be avoided.
Please get in touch if you would like to speak to an adviser.
Reanda UK is a subsidiary of leading independent accountancy firm Grunberg & Co Limited. Our aim is to help businesses and individuals to navigate the UK’s world-renowned business and tax infrastructure, and to support them with their international ambitions. To find out how we can help you, please contact us.