Doing Business in the UK

There are several types of entities that can be incorporated in the UK. The three most common are:

• LIMITED COMPANY;
• LIMITED LIABILITY PARTNERSHIP (LLP);
• UK ESTABLISHMENT (a branch or a place of business).

Regarding to the chosen corporate structure, the company, establishment or LLP must register with Her Majesty’s.

Revenue & Customs (HMRC) to pay all of the business’s tax liabilities.

• General Corporate Tax rate is 19% (by the 1 April 2021), the tax rate can be reduced to 10% when the taxable profits can be attributed to the exploitation of patents, a lower effective rate of tax applies;
• Value Added Tax (VAT) rate is 20% is a form of indirect tax and it is charged on the provision of most goods and services provided in the UK.

• Income Tax (Pay as you earn - PAYE) rate is deducted from an employee’s salary on a monthly basis. An employer must automatically pay these taxes to HMRC.

If you decide to run payroll yourself, you need to complete certain tasks to pay your employees for the first time. You can choose when and how often to pay your employees.

1. Register as an employer with HMRC and get a login for PAYE Online;
2. Choose payroll software to record employee’s details, calculate pay and deductions, and report to HMRC;
3. Collect and keep records;
4. Tell HMRC about your employees;
5. Record pay, make deductions and report to HMRC on or before the first payday;
6. Pay HMRC the tax and National Insurance you owe.

Most employees in the UK are eligible for a personal allowance of tax-free income. There are varying levels of income tax rates in the UK:

The UK employment law is derived from common law, domestic legislation and European law. The last one is the source of a number of employee protections within the UK, while also safeguarding an employer’s interests and keeping the relationship between the two fair.

The UK law grants employees a range of protections that create obligations and potential risks for employers. Although these are generally less stringent than in other European countries, you will nonetheless need to be aware of them:

• a general duty to provide a safe place of work, safe access and safe work systems;
• a requirement to provide a written statement of terms and conditions of employment to employees within two months of commencement of employment;
• an obligation not to discriminate against employees;
• an obligation to pay employees at least the national minimum wage;
• various benefits in connection with giving birth, adoption and other family situations;
• a requirement not to allow a worker to work beyond 48 hours per week;
• a duty to give each employee a minimum amount of 28 days paid holiday each year;
• various rights for employees to protect them in the event of termination of employment.

It is beneficial for an employer to make a comprehensive contract of employment to each employee. This can include all of the terms and conditions of employment, covering the rights described above, and in addition protect the employer’s business interest.

The UK is highly ranked for offering businesses a developed regime for the protection and monetisation of intellectual property rights (IPR). The main types of IPR in the UK are:

• TRADE MARKS, BOTH REGISTERED AND UNREGISTERED;
• PATENTS;
• DESIGNS, BOTH REGISTERED AND UNREGISTERED;
• COPYRIGHT;
• TRADE SECRETS.

The best way to manage your intellectual property (IP) is to take stock of your IP assets regularly.

The new immigration point-based immigration system applies to both EU citizens and non-EU citizens. It gives a priority to high-skilled workers, skilled workers, students and a range of other specialist work routes including routes for global leaders and innovators.

Under the points-based immigration system, anyone coming to the UK for work must meet a specific set of requirements for which they will score points (at least 70 points). New system provides flexible arrangements for UK employers to recruit skilled workers from around the world.

As an entrepreneur it is possible to apply for a special type of visa, as a:

• Start-up visa (for those who wants to set up an innovative business in the UK - it must be something that’s different from anything else on the market)
• Innovator visa (for those who wants to set up an innovative business in the UK - it must be something that’s different from anything else on the market, furthermore your business or business idea should be endorsed by an approved endorsing body

• Investor visa (you need to  invest £2,000,000 or more in the UK)

The UK FinTech ecosystem is known as a second highest ranking globally. It has the world’s highest concentration of financial and professional services firms and it increases up to 21% year by year.

The UK’s FinTechs involve 25 different specialisms, which can be accumulated into 8 broad categories – banking, RegTech, InsurTech, WealthTech (including PFM and cryptocurrencies),  lending, payments, quote aggregators and accounting, auditing and cashflow management.

When you decide to incorporate a business in the UK you need a space for your company. The UK provides a number of different options in which to do business, depending from its needs, flexibility, location and cost. The four main models of office space available for companies are:

• Freehold or long-term leasehold spaces;
• Serviced office locations (usually short-term);
• Co-working spaces (need to get a license to occupy);
• In-house at various accelerator and incubators (need to get a license to occupy).

The property right that a company acquires will depend on the type of office space chosen.

After 1 January 2021 companies need to use UK-adopted International Accounting Standards (IAS) instead of EU-adopted IAS, regarding to the guidance. UK companies will also need to appoint a UK-registered audit firm to sign any audit reports on their behalf. These changes will effect a small number of companies operating in the UK.

By the UK law all companies based in the UK require an audit. However, there are several exceptional cases from this rule, based in the size of the company or group. Your company should be a Private Limited Company and has at least 2 of the following:

• an annual turnover of no more than £10.2 million;
• assets worth no more than £5.1 million;
• 50 or fewer employees on average.

Your company must have an audit if at any time in the financial year it’s been one of the following:

• a public company;
• a subsidiary company;
• an authorized insurance company;
• carrying out insurance market activity;
• involved in banking;
• an issuer of electronic money;
• a Markets in Financial Instruments Directive (MiFID) investment firm;
• an Undertakings for Collective Investment in Transferable Securities (UCITS) management company;
• a corporate body and its shares have been traded on a regulated market;
• a funder of a master trust pensions scheme;
• a special register body;
• a pensions or labour relations body.