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Businesses are strongly drawn to the United Kingdom as it is one of the world’s top investment destinations known for its entrepreneur-friendly climate and favourable tax rates. The UK and London as a global business hub, rank among the most appealing corporate locations when considering expansion from the rest of Europe or globally. Having weathered the storm of Brexit, the attractiveness of doing business in the United Kingdom and this thriving market remains. The variety of sectors, such as energy, pharmaceuticals, healthcare, IT or fintech, have been flourishing despite COVID due to the UK’s accommodating approach towards foreign investments.
The oil and gas industry plays a central role in the United Kingdom economy. In addition, banking and insurance industry is considered one of the largest.
The strongest workforce in the United Kingdom is centred in the financial technology (FinTech) industry.
In the United Kingdom, one of the favoured investment incentives, aimed at stimulating investment by increasing income from it or reducing its costs, is provided in the form of tax reliefs. This is especially important when you consider doing business in the United Kingdom and wish to explore the incentives of the countries before entering the market.
The most common legal form for doing business in the United Kingdom is a private company limited by shares (or LTD in short).
The incorporation time for such a legal form of business usually takes up 3-5 hours, counted from when the necessary documentation is signed.
The fees related to establishing an LTD form of business are from GBP 50, if submitted online on Companies House or slightly more if you do it through a service provider.
For setting up a private company limited by shares, at least one shareholder is required. The LTD company is also required to have at least 1 director, who can be the same as the shareholder.
The official company register of United Kingdom is open to public and can be accessible at www.companieshouse.gov.uk.
The corporation tax in the United Kingdom ranges from 19% to 25% for companies with profits over GBP 250,000 as well as the introduction of a small profits rate of 19% with effect from 1 April 2023. Marginal relief is applied gradually between GBP 50, 000 and GBP 250,000 profit bands.
The tax period in the United Kingdom is the accounting period.
The deadline for your tax return is 12 months after the end of the accounting period.
When doing business in the United Kingdom, a company is considered the UK tax resident if it is either incorporated in the UK or, despite being non-UK incorporated, the business of the company is centrally managed and controlled in the UK.
Companies doing business in the United Kingdom and with a taxable turnover of over GBP 90,000 must register for VAT. Registering time for the UK VAT can vary but can generally takes around four to six weeks.
There is no longer any non-resident VAT registration threshold, therefore foreign companies must register for UK VAT immediately, if they are providing taxable supplies.
There are rules to consider on some situations where a registration is permitted. Some common scenarios below would result in a requirement for a UK VAT registration:
There are three different levels of government where taxes may be paid to when doing business in the United Kingdom: the central government (HMRC), devolved governments (notably, Scotland), and local governments in the form of council taxes.
HMRC administers the following central taxes:
In the United Kingdom, the following individuals are entitled to work:
The next types of employment contracts are available for companies doing business in the United Kingdom:
Contract types and employers’ responsibilities can be accessible at https://www.gov.uk/contract-types-and-employer-responsibilities.
Minimum wage is currently £11.44 per hour for over 21s in 2025.
The personal income tax rates in the United Kingdom:
These above brackets are frozen until 2028, as per the UK budget policy set in 2021.
The tax period for personal income tax runs from 6th April to 5th April each tax year.
In the UK, the due date for the paper tax returns is the midnight of 31st October and for the online tax returns the due date is the midnight of 31st January.
An individual is considered as a tax resident in the UK when the Statutory Residence Test (SRT) is met:
As a taxable income of an individual in the UK is considered:
The rate of the social security contributions paid by the employer in the UK is:paid by the employer in the UK is:
In the UK, private medical insurance is optional and provided at the employer’s discretion. If offered, it is generally considered a taxable benefit for the employee. It is not covered by National Insurance.
In the UK, employees contribute National Insurance at different rates than employers. Employee Class 1 NICs are currently:
(Rates may vary; check HMRC for updates.)
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