Doing Business in the United Kingdom
Country facts
| Capital | London |
| Population | 66.6 million |
| GDP | 2,662.4Billion USD |
| Language | English |
| Average Monthly Gross Salary in Euro | GBP 2,227 |
| Currency | GBP |
| World Bank Doing Business Ranking | 7 (USA Ranking 6) |
Most Common Form of Business Entity
A foreign business can establish their operations in the UK as a company, partnership or branch. The most common form of legal entities are:
| Limited Liability Company – Limited | Public Joint Stock Company (Public Limited Company) | |
| Capital Requirements | Minimum share capital GBP1 | GBP50,000 minimum At least 25% to be paid before the company commences its business activity |
| Directors | Minimum of 1 board member– one must be an individual | Minimum of 2 board members (at least one must be an individual) and company secretary required |
| Shareholders | 1 or more individuals or legal entities | 1 or more individuals or legal entities |
Corporate Taxation:
The Corporate tax rate is 19% in 2018.
Employment / HR Requirements
Employment Contracts: Employees have a right to receive a written statement of their terms of employment within two months of starting work. Employers may be liable to a fine of between two and four weeks’ pay, if employees are not given such a statement. Most employers comply with this requirement by including the necessary terms within a formal written contract of employment.
Employee Tax: Employees whose tax residence is in the United Kingdom are subject to progressive income tax rates, currently in bands of 20% (basic rate), 40% (higher rate) and 45% (additional rate). Most individuals receive an annual tax-free allowance, which for the 2018 to 2019 tax year is GBP11,850. This is tapered away for individuals earning in excess of GBP100,000 and reduces to zero for employees earning £123,700 or above per annum.
Social security contributions are paid by both employer and employee. Employees pay 12% NICs on their earnings between GBP157 and GBP866 per week. Earnings over GBP866 per week are subject to 2% NICs.
Employers: Employers must withhold tax income tax and social security contributions on behalf of their employees.Employers pay 13.8% NICs for all earnings above GBP157 per week.
Valued Added Tax:
The standard rate of VAT is 20%, with a reduced rate of 5% for certain items.
Business that carry Vatable activities must register with the UK tax office where the annual value of supplies exceeds GBP85,000.
Valued Added Tax on Digital Services:
All Non-EU based businesses that provide electronic services or download to individuals or non-business consumers in the UK must register for VAT either in the UK or in another EU state.
Data Protection:
The United Kingdoma dopted the EU General Data Protection Regulation into English law in May 2018. The key variations from the GDPR Requirements are:
- Reduces the age of consent for minors to 13 years old.
- Allows the processing of special categories of personal data and criminal conviction data without consent under certain circumstances.
- Restricts rights to access and delete personal data in certain circumstances.
- Covers law enforcement and national security processing.
- Specifies additional powers of the supervisory authority.