Establishing a business in the United Kingdom
İf you are an overseas business holder and looking to start a business in UK , one of the first things you need to do is choose a business structure that’s right for you.The legal structure you choose will affect the way you run the business and the tax you pay.
The legal structures for setting up a commercial business entity in the UK are:
1 ) Limited Company which comes in 3 common types:
- Private limited company
- Public limited company
- Limited Liability Partnership
*Almost always when somebody describes to a Limited company, they are referring to a Private Limited Company (Ltd)
2 ) UK establishment
- Limited Partnership
- Sole trader
Taxation in UK
Value Added Tax – VAT-Sales Tax rate
The standard rate of VAT is 20% with reduced rate of 5 percent applies to some goods and services, eg children’s car seats and home energy.
|Rate||% of VAT||What the rate applies to|
|Standard||20%||Most goods and services|
|Reduced rate||5%||Some goods and services, eg children’s car seats and home energy|
|Zero rate||0%||Zero-rated goods and services, eg most food and children’s clothes|
VAT registration is required if your turnover for the past year has exceeded the £85,000.However you can voluntary register for VAT in the UK. An advantage of voluntary VAT registering is that the company can avoid any late VAT registration penalties if the company exceeds the VAT registration threshold in the future without realising. Therefore it is beneficial to voluntarily VAT register in order to avoid any ongoing concern about exceeding the VAT registration threshold.
Corporate tax rate in UK stands at 19%. This type of tax is a tax collected from companies
|Small profits rate – For companies with profits up to £300,000||19%|
|Main rate – For companies with profits above £300,000||19%|