Entering the UK Market
Entering the UK Market
Foreign companies who wish to expand into the UK will be met with a world-renowned business hub that includes a highly educated workforce, attractive tax rates and incentives, as well as low labor and administration costs. However, setting up shop in an unfamiliar place comes with its own challenges. Foreign businesses must comply with employment, tax, payroll, and corporate legislation whilst ensuring that their employees are working productively and efficiently.
The alternative solution to overcoming these issues involves working with a Professional Employer Organization (PEO) such as Bradford Jacobs, using our Employer of Record (EOR) in-country experts to handle every aspect of compliance. You can depend on our specialists’ in-depth knowledge of the UK’s culture, customs, and business practices.
Starting a Business in the UK
The UK’s geographical position benefits from access to diverse marketplaces in Europe, North America, Asia, and Oceania. With strong commercial services, communications, and manufacturing sectors, as well as high-quality logistics and infrastructure, this creates an attractive environment for any business owner who seeks to expand their business. To start a business in the UK you must go through a company registration procedure, which is straightforward and designed to be executed easily. These steps can be done in person or online through the government website or electronic software filing.
The necessary steps to start a business in the UK include:
Decide on the company type that suits the nature of your business, your business goals and matches your own capabilities to meet establishment requirements.
Obtain a business address in the UK. The business address must be in the same country that the company is being registered in – so a company registered in Scotland must have a business address in Scotland, for example.
- Decide on a company name and check on its availability.
- Appoint a company secretary.
- Prepare the appropriate registration documents.
- Open a local business bank account in the UK and deposit the appropriate share capital.
- Notarize registration documents at a notary’s office.
- Register your company at the Companies House.
- Register with the UK’s HM Revenue & Customs.
- Register for a VAT Number.
- Receive Certificate of Incorporation.
- Register with National Insurance to pay social security contributions from employers and employees.
- Acquire a trading certificate before commencing business (depending on the company type you choose)
Expanding Business into the UK
Foreign entities wishing to expand into the UK will be met with a thriving economy that benefits from low corporate tax rates and attractive tax reliefs, highly-qualified talent pool and attractive labor and administrative costs – which is provided to all entities that enter the market.
The UK has the largest air transport system in Europe, and its location benefits from its proximity to all of Europe’s leading technology markets, which can be reached in under 2 hours from any of South England’s international airports. The country’s position also offers easy trade between continents, with the help of its strong infrastructure. Expanding one’s business into the UK creates a lot of opportunity for expansion both nationally – particularly to popular district capitals such as London, Edinburgh, Bristol, Glasgow, Cardiff, and Belfast, which are popular tourist and commercial destinations – and internationally.
Business Facts
- Capital City – London
- Population – 67.88 million
- Cities – Aberdeen, Edinburgh, Bristol, Cambridge, Canterbury, Cardiff, Birmingham, Coventry, Glasgow, Manchester, Liverpool, Belfast, Perth
- Official language(s) – English
- Economy/GDP (2020) – 1.96 trillion
- World Ranking (Ease of Doing Business) – 8th
- Leading sectors – Finance and banking, information technology, construction, oil and gas, government, healthcare, manufacturing
- Main exports – Machinery including computers, vehicles, gems and precious metals, mineral fuels including oil, electrical machinery, pharmaceuticals
- Main imports – Crude and refined petroleum, vehicles, packaged medicines, computers
- Main trading partners – European Union, USA, Germany, Netherlands, France, China, Ireland, Spain, Belgium, Italy
- Government – Unitary parliamentary constitutional monarchy
- Currency – GBP, British Pounds
- Advantages and Challenges of the UK Market
The Benefits:
The UK is the eighth easiest country in the world to carry out business, according to the World Bank’s report on the Ease of Doing Business Report.
UK Corporation Tax is 19%, which is the lowest in the G20.
The UK has a 10% Corporation Tax rate for profits on inventions patented in the UK.
UK-based companies are in easier geographical reach of 500 million potential customers in the EU alone.
The UK’s 30 million workforce includes world-class academic/research talent and highly skilled workers.
Overall labor costs in the UK are lower than many European competitors, such as France, Germany, and the Netherlands.
Post-Brexit the UK is free to set tax, legal and finance regulations independently and react flexibly to market changes.
The Organization for Economic Co-operation and Development ranks the UK with the fewest barriers to entrepreneurship and the third fewest barriers to trade and investment.
The UK boasts a range of ‘business clusters’ nationwide including advanced engineering and medical technologies, life sciences and renewable energy.
The Disadvantages:
Leaving the EU brings uncertainty over cross-border commerce. British companies exporting to the EU face new tariffs, while EU businesses exporting to the UK could be discouraged if they also face new tariffs.
Cost of establishing/terminating a subsidiary or entity.
Fines and penalties for failing to comply with employment, taxation, and immigration regulations.
Business practices and cultural barriers.
Managing payroll and HR obligations of international employees remotely.