Doing Business in the United Kingdom
|Average Monthly Gross Salary in Euro||GBP 2,227|
|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|
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.
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.