• Contact
  • Accountants: +44 (0) 1753 551111
  • Solicitors: +44 (0) 20 7067 4300

1. TAX INCENTIVES

Competitive tax system

    • Low overall tax rate of 19%  
    • Reducing to 17% from April 2020
    • R&D Tax Credits
    • Creative Industry Reliefs (e.g. Videogames, Film etc.)

Government funding is more limited than in some countries which comes as a surprise but there is regional funding in some areas such as Wales and Scotland and the R&D and Creative Industry reliefs are generous, and easy to access. DIT can help advise on what funding options may be available.

2. EASE OF SET-UP

Formation of a limited company is fast and inexpensive with no minimum capital requirements.

Only need 1 director & 1 shareholder, neither of which need to be British or live in the UK.

Payroll registration is quick and easy to do.

VAT registration is mandatory for turnover above £85k. Overseas companies may elect to, and sometimes must, register.

UK Limited Companies are extremely robust structures that provide excellent protection for Directors and Shareholders.

3. R&D AND PATENT BOX

R&D Tax incentives are generous and easy to access. You can conduct your R&D anywhere in the world and claim up to 33% of the cost of salaries, subcontractors and consumables used whilst conducting the R&D, as a cash back payment to the company.

Creative Industry Reliefs include a range of reliefs for different industries. For instance, the Video Games Tax Relief offers a 20% cash back payment for the development of Video Games.

Patent Box requires you to hold an EU patent and you can then benefit from a lower Corporation Tax rate of 10%. The details are however complex.

4. EMPLOYMENT

Self-Employed or Employee?

Employees are entitled to more rights (e.g. holiday and sick pay). But you have 2 years until they acquire full employment rights, and before this you can dismiss without reason.

Self-employed individuals deal with their own income tax and social security and have greater control over their business.

HMRC and employment tribunals determine status by looking at the actual nature of the relationship, not just the agreement in place.

All new companies must auto-enrol employees into a pension scheme with employer’s contributions.

5. WORK VISAS

Representative of an Overseas Company:

Send an employee to UK to set-up a branch or subsidiary. Initial 3-year visa. Apply before starting to trade in the UK (extendable for 2 years).

ICT VISA (Intra-company Transfer Visa)

Once a subsidiary has been set up in the UK, the subsidiary can sponsor employees of the parent company under this type of visa. The applicant must have been employed by the parent company for a least 12 months. This visa is valid for 5 years.

Tier 2 Skilled Worker Visa:

Employer applies for a sponsor license and can then apply to bring a non-EU citizen to work in the UK

6. INTELLECTUAL PROPERTY (TRADEMARKS)

UK: Protection in the UK only.

Fee is £200 for application in one class plus legal fees (includes searches, report and application), and the process takes 3-4 months.

EU: Protection in all 28 EU member states including the UK. Fee is €850 for application in one class plus legal fees as above and takes approx. 6 months.

The owner of a trademark can legally defend the mark against infringements.

7. DATA PROTECTION

  • The General Data Protection Regulation (GDPR) came into force on 25th May 2018
  • Intended to harmonise European privacy laws for the ‘big data’ era.
  • Applies to all businesses established inside or outside the EU, which offer goods or services to EU citizens or monitor their behavior.
  • Potential fines for breach at 4% global turnover or €20m, whichever is the higher.

8. PROPERTY

Ownership: UK statute dictates many of the key terms and conditions in a lease.

Lease structure: leases are usually on a full repairing and insuring basis. Rent is quoted net of taxes, insurance and service charge.

On average a commercial lease is for 2-5 years.

It is common for tenants to receive a rent-free period of 3 to 6 months at the start of a lease.

9. BANK ACCOUNT

Opening a UK bank account:

Can take between 3-6 months, but new challenger banks have improved this process. There are fewer options if the company has no UK Employees or Directors but should still be able to open a bank account within 4-6 weeks.

The Bank will have an involved KYC process, and you will need to help the bank comply with their requirements.

10. INVESTORS EIS/SEIS

EIS: 30% income tax relief for an investor on investments up to £1m each tax year.  A company can raise up to £5m each tax year under EIS (and a total of £12m during its lifetime).

Sale of shares can be free of capital gains tax after a qualifying period of 3 years.

SEIS: Available to small start-up companies (under 2 years old) with under 25 employees and £200k assets. Investor receives 50% of the investment as income tax relief (maximum investment of £100k per investor per year).

A company can raise no more than £150k in total under SEIS.

Disclaimer: This note does not contain a full statement of the law and does not constitute legal advice. Information correct at date of publication. Please contact us if you have any questions about setting up in the UK. © Oury Clark 2018

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