Global expansion into the UK generally means that you need to set up an in-country entity. However, by partnering with us you create the possibility to bypass this process and utilize our UK entity. By using our PEO-service we take care of the complicated paperwork.
Expanding into a new country is always an adventure, but we believe this adventure should be exciting instead of just frustrating and time-consuming. Therefore, we have been supporting companies in over a hundred countries with their expansion plans.
In this guide, we will share which documents you need to establish an entity in the UK, but also where you will need to register your business address and company’s name. We will also break down the advantages and disadvantages of setting up an entity in Britain.
Setting up an entity in the UK
In the UK, foreign subsidiary entities act as an extension of the parent company, but enjoys the same company standing as domestic businesses, and are subject to all national laws. The registration process in the UK comes with some variation (depending on the company type), but it is generally straightforward and can be done with little difficulty.
Tax processing, filing accounts, law compliance, workforce management, payroll, recruitment… all these matters must be managed effectively, which can eat up your time, money, and resources.
You can lighten this load by partnering with Bradford Jacobs, an Employer of Record (EOR) company. Use our services and be up-and-running with a presence in your new territory within days, rather than months.
How to set up a UK Subsidiary
Setting up a subsidiary requires these steps:
- Decide on the company type that suits the nature of your business, your business goals and matches your own capabilities to meet establishment requirements. Common company types include:
- the Limited Liability Company
- the Public Limited Company
- the Company Limited by Guarantee
- Limited Liability Partnership
- Branch Office
- Representative Office
- Obtain a business address in the UK. The business address must be in the same country that the company is being registered in –for example, a company registered in Wales must have a business address in Wales.
- 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.
Registration Times & Fees
- Open a bank account - Depends on bank
- Application: Electronic Software Filing - £10 (£30 for same-day applications)
- Application: Web Services - £12
- Application: Paper Filing - £40
Overall, the company registration process takes less than a week (without delays). Registration for a corporate bank account, however, may take more time – any time between 4 weeks to 3 months, depending on the bank’s registration process.
Company registration can take place in-person or online. Applications via paper filing are done at the local office of Companies House, and fees are payable by check to the Companies House.
There is also the website application through the government’s website, which is the quickest and easiest way to register the company with the Companies House and are normally processed within 24 hours. However, this is only used for the following company types:
- A private company limited by shares
- A private company limited by guarantee
- A Community Interest Company
This application method includes registering your company for corporation tax and optional PAYE, so you do not have to apply for them separately. The set-up fees are only payable through card and PayPal.
Lastly, company applications can be done via electronic software filing. Submissions can be done electronically through the services of incorporation agents and software providers that have developed systems to offer customers a web-based service, which is chargeable.
The standard fee for these applications is £10, or £30 for same-day service for applications received by 11am Monday to Friday. These application types are normally processed within 24 hours.
What you need to set up a UK Subsidiary
For foreign companies wishing to expand into the UK, certain requirements must be met:
- A UK business address – leased or purchased with all relevant documentation.
- A local bank account with the appropriate share capital deposited (which varies according to the subsidiary type).
- Appointment of company directors and secretary.
- Completed registration documents:
- Application Form IN01
- The Memorandum of Association
- The Articles of Association
- Documents with information of the subsidiary’s shareholders, directors, and secretary
- Business address documentation
- Confirmation of the payment of statutory fees
- A trading certificate (depending on the company type)
5. Notarized and legalized registration documents that are translated to English.
6. Certificate of Incorporation.
7. A Tax Identifier Number.
8. A VAT Number.
9. Registration with National Insurance, for social security contributions.
Benefits of Setting up a UK Subsidiary
Britain is a formidable destination in Europe for subsidiary establishment and growing a business’ influence. There are also other significant benefits to establishing an entity in the UK:
- Subsidiaries in the UK are taxed the same as any other resident company.
- Subsidiary entities in UK also benefit from over 100 double taxation treaties, making the country an investor-friendly tax regime with an extensive network.
- The UK has been recognized by the World Economic Forum as one of the top ten most competitive economies of the world.
- The UK benefits from low corporate tax rates, with no withholding taxes on dividends and a variety of tax relief schemes to choose from.
- The UK is regarded as the 3rd best country in the world for attracting global talent, according to the Global Talent Competitiveness Index (2018).
- The UK boasts labor costs that are lower than Germany, Italy, or France.
- The UK also boasts a digital infrastructure that supports a tech sector which is larger than the rest of Europe combined.
UK Subsidiary Laws
In the UK, subsidiary laws may vary depending on the subsidiary entity type you wish to establish – but all are regulated under The Company Act. Compliance entails meeting these requirements:
Registration & Documentation
- Private limited liability companies require at least 1 director and 1 shareholder, who can be of any nationality, whilst public limited companies require at least 2 directors (who can be of any nationality) and 2 shareholders.
- A resident company secretary must also be appointed in the company before registration.
- For company incorporation, public companies require a share capital of at least £50,000, and limited liability companies require a share capital of at least £1.
- All entities are regulated by the Companies House.
- All public companies must acquire a trading certificate from Companies House confirming that it has the minimum allotted share capital before it can start conducting business.
- All companies are required to have a local business address in order to register.
- Entity Founders Documentation – foreign founders must submit certain documents that confirm their identities, for both private individuals and legal persons/entities, including parent company information, information on beneficiaries and shareholders, etc.
Accounts and Taxation
- All subsidiary companies (excluding the limited liability partnership and the representative office) must pay a corporate income tax rate of 19% on profits generated in the UK or globally if the company is based in the UK.
- Subsidiary entities are exempt from paying withholding taxes on dividends; but they are required to pay withholding taxes on interest and royalties at a rate of 20% (unless reduced by a double tax treaty).
- Entities must register with their local HM Revenue and Customs Department office within 3 months of incorporation.
- Registration for VAT is also mandatory for all company types.
- Entities are also required to pay employee and employer contributions to National Insurance.
- Annual accounts must be sent to the Companies House, whilst the annual company tax returns must be sent to the HMRC.
- The tax period for corporations is the same as for income tax – 6th of April to the 5th of April the following year. Companies are obliged to file statutory accounts and a tax return within one year from the end of the accounting period. The return must be done by self-assessment and must be filed online.
- All shareholders and directors must be registered with the Companies House.
- The number of directors required for incorporation depends on the type of company being incorporated.
- In the case of a secretary, a private company does not need a company secretary unless their articles of association requires it. A public company requires a company secretary that possess the following qualifications:
- held office of secretary for a public company in the last 3-5 years
- is a barrister, advocate or solicitor called or admitted in any part of the UK
- is a member of a professional body of secretaries and/or accountants
- For every change in particulars of the company or of its officers occurs, this must be logged with the Companies House no later than 14 days from the day of the changes made, or a month of the shares transfer for shareholders.
- All companies are required to submit a remuneration report for each financial year of the company, which must be prepared by the directors.
- Directors must hold an Annual General Meeting (AGM), which must be called within six months of the company’s accounting reference date (for public companies), or in each period of nine months beginning with the date following the company’s accounting reference date (for private companies that are traded companies).
- There is no statutory requirement to hold shareholder meetings and is at the discretion of the entity’s articles of association.
Working with Bradford Jacobs
Establishing an entity takes considerable time and resources, despite the ease of establishment you can find in the UK. To do this, you need to acquire the right people and the right resources, which will not be easy. A cost-effective and time-saving alternative to this is engaging the services of a Professional Employer Organization (PEO) such as Bradford Jacobs.
With over two decades of global recruitment expertise and our Employer of Record (EOR) solutions, we can have employees operational within days, ensuring that all laws and regulations (employment, payroll, tax) are followed. Our Human Resources’ experts will ensure a smooth transition of your onboarded employees into your new territory. International borders should not stand in the way of international expansion.
Contact us today to make your expansion goals a reality, with ease and confidence.