Doing Business in the United Kingdom

Country facts

Capital	London
Population	67.33 million
GDP	2.75 Trillion in USD (2022)
Language	English
Average Annual Gross Salary	GBP £34,000 / USD $41,220
Currency	GBP
World Bank Doing Business Ranking	8 (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 1 board members
Shareholders	1 or more individuals or legal entities	1 or more individuals or legal entities

Corporate Taxation:

For UK companies with annual profits of less than GBP 50,000, the Corporate tax rate is 19%.

For UK companies with annual profits greater than GBP 50,000, the rate is 25%.

Employment / HR Requirements

Employment Contracts: There is no legal requirement to provide a written contract of employment. However, it is recommended and best practice to have employment contracts in place. As a minimum, employers must provide their employees with a written statement of their specified terms of employment within two months of their employment start date.

Wage Tax & Social Security: Employers must deduct income tax and social security contributions from employee earnings.

Employee Wage Tax: UK-based Employees pay wage tax at the following rates:

• 0% on annual earnings up to GBP 12,570
• 20% (basic rate) on annual earnings between GBP 12,571 and £50,270
• 40% (higher rate) on annual earnings between GBP 50,271 and £125,140 and
• 45% (additional rate) on annual earnings over £125,140

Employee Social Security Contributions: Employees pay 12% National Insurance Contributions (NICs) on their monthly earnings between GBP 1,048 and GBP 4,189 and 2% on all earnings thereafter.

Employer Social Security Contributions: Employers pay 13.8% NICs on all monthly employee earnings above GBP 758.

Valued Added Tax:

The standard UK VAT is 20% on most goods and services. A reduced rate of 5% applies on certain items e.g. home energy. A 0% rate applies on some items, such as most food items and children’s clothing

Valued Added Tax on Digital Services:

All Non-EU based businesses that provide electronic services or digital downloads to individuals / consumers / non-business entities in the UK must register for VAT either in the UK or in another EU state.

Data Protection:

Data Protection Act 2018 (DPA 2018) applies in the UK.

The provisions of the EU GDPR have been incorporated directly into UK law as UK GDPR.

In practice, there is little change to the core data protection principles, rights and obligations between UK GDPR and EU GDPR