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How to Incorporate Company in the United Kingdom?

Narendra Kumar

| Updated: Sep 24, 2018 | Category: Company Registration, Global Registration

Incorporate Company in United Kingdom

The Act that governs the Principal Corporate Legislation is Companies Act 1985 (amended), and the Income and Corporation Taxes Act 1988. For the purpose of international trade and investment, there are two types of Companies that is Public or private Companies. A company that is incorporated in the United Kingdom has a separate legal entity and thus has the same powers as a natural person. Here in this article, we will talk about Incorporate Company in United Kingdom

Types of Companies

There are two types of Companies in the United Kingdom which are used for international trade and investment that is private limited and public limited. There is also an unlimited company as well.

In the United Kingdom, there are restrictions on the trading and business activities that are specified type of services, including banking, insurance, financial service, and customer credit related services and employment agencies are not permitted.

What is the Procedure of Company Registration in the United Kingdom?

Every company in the UK needs to be registered with the Companies House. The application form in respect of this is IN01 which along with other registration documents such as the Memorandum of Association and the Articles of Association with a declaration of compliance and statement by the First Directors and Secretary needs to be submitted. The details such as the rights of the shareholders, borrowing powers and the duties of Directors should be mentioned.

A notification of the registered office location is also required. The registered office should be located in the United Kingdom. The off-the-shelf companies are also available in the United Kingdom. The registration process normally takes up about 8-10 days from the submission of the documents to the Companies House. Companies can be formed online also using the web incorporation service which usually takes 2 days to complete.

The public companies are required to include the words “Public Limited Company “ or plc as an integral part whereas the private company should include limited or Ltd in their name.

What are the Documents Required for Company Registration in the United Kingdom?

The basic documents required are:

  • The Company’s Memorandum of Association
  • Details of shareholders
  • Details of Directors and other people having significant control
  • Standard Industry Classification (SIC) code
  • Application form
  • Copy of passport or ID of shareholder, Directors, members

Mandatory Requirements:

  • Minimum 1 Director of any Nationality
  • Minimum 1 shareholder of any Nationality
  • Registered Office Address (office should be situated in the UK).

What is the Taxation aspect in the United Kingdom?

One of the most popular options for foreign investors is usually to set up a private limited liability Company either as a separate Company or as a subsidiary of a foreign-owned holding Company. The United Kingdom Corporate entities and other foreign entities trading in the UK are liable for corporate tax on the income and capital gains. Other taxes apart from this which affect the companies are withholding tax, Value added tax (VAT), stamp duty etc.

The United Kingdom offers participation exemption for dividends and other capital gains. The tax laws of the United Kingdom are enacted by parliament, generally in an annual Financial Act that amends and supplements core legislation. The corporate tax rate currently is at 20% which prior to 2015 was 21 %. Also, the loss relief can be carried forward for an indefinite period for corporate entities. The double taxation relief is also available for the corporate.

What is the Annual Compliance in the United Kingdom?

The public limited Companies are required to file annual accounts, along with the additional details, with the Companies House, which is available publically. Except for the SME, the accounts shall include a profit and loss account, balance sheet signed by the Director of the Company and the Auditor’s report. A detailed Director’s report is also prepared and needs to be signed by the Director or the Company Secretary of the Company. The private limited Companies are subject to the same requirements, except for the provisions that are applicable on SME’s. The auditing requirements involve that for the periods beginning on or after 1 January 2015, UK businesses need to follow either EU-adopted International Financial Reporting Standards (IFRS) or the Financial Reporting Standards (FRSs). The new EU Accounting Directive shall be applicable for accounting periods commencing on or after 1 January 2016.

Market Size

The United Kingdom is considered to be the global financial hub, wherein London is the Prime Financial capital of Europe. The United Kingdom is a prominent gamut of new industrialists. The business environment of the UK is simple and stable. It has a highly competitive business-friendly tax climate which helps in making Europe an appealing commercial home. UK is considered to have a liberal market economy wherein prices are determined in accordance to the supply and demand. The government regulates the prices of certain industries like branded pharmaceuticals, energy, and transport.

What all Industries/Business Popular in the United Kingdom?

Some of the most common manufacturing sectors in the United Kingdom include food, drink, tobacco, paper, printing publishing, and textiles. In terms of revenue generation, Oil/gas Companies are high rated. Also, the banking/finance sector in the United Kingdom is gaining importance.

What are the Benefits of Company Registration in the United Kingdom?

  • The United Kingdom serves as a fertile ground for the business which is helpful in grabbing significant opportunities and expansion of capital. It becomes remarkably beneficial for commercial development.
  • It is a global market for investors. The investors are enormously fascinated by the nature of business in the United Kingdom.
  • The United Kingdom is very particular in the optimum utilization of its resources.
  • Conducting business in the United Kingdom helps in removing the trade barriers and reduces the business costs. This helps in greater business efficiency.
  • The standard of living in the United Kingdom is high which also significant factor for attraction for the investors to invest.
  • For foreign investors, private limited liability company is a great option considering the tax exemptions provided to them and the limited liability factor.

Bank Account Opening Process in the United Kingdom

In many countries, it is necessary to open an account in order to trade, but the United Kingdom allows the investors to use the account from Abroad, as long as the investor company is clear about using a foreign bank account. It is always advisable for companies to open an account to conduct hassle-free operations and trade is easy by this way. It is not necessary to be residing in UK in order to open a bank account. a registered office address along with residency proof of directors is often sought for opening the bank account.

FAQ for Company Registration in the United Kingdom:

  • What do you mean by Companies House?
  • Companies’ house is the sole regulator for the registrar of business in the UK. All the companies are supposed to be registered by Companies House and the same needs to be kept in record.
  • Is residence in UK mandatory to be a Director?
  • No, one does not need to be a UK individual to be a director of a limited company.
  • What are the obligations of the Director?
  • Directors shall be accountable for running the business legally and effectively. There is a requirement of keeping efficient business regulations, keeping documents and also filing of return and signing reports on scheduled time.
  • Who can be an investor?
  • Any person could be an investor, considering one more company (business investor).
  • In how many days a company can be incorporated in the UK.
  • Usually, 8 days are taken for Company Registration which can be reduced to 2 days if going through online mode.
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Narendra Kumar

Experienced Finance and Legal Professional with 12+ Years of Experience in Legal, Finance, Fintech, Blockchain, and Revenue Management.

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