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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 from 19% to 25% for companies doing business in the United Kingdom and with profits over GBP 250,000 as well as the introduction of a small profits rate of 19% with effect from 1 April 2023. The small profits rate will apply to companies with profits of not more than £50,000, with marginal relief available for profits up to GBP 250,000.
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.
The personal income tax rates in the United Kingdom:
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:
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:
Health insurance paid by an employer in the UK is not covered by national insurance, unless covered by private healthcare, which is on an individual basis.
The rate of the health insurance contributions paid by the employee in the UK is the same as for the employer.
About Accace
Accace is a proactive consultancy and outsourcing partner who bridges the gap between needs and solutions. Combining smart and streamlined technology with a holistic approach, we provide an all-round care to clients and consider their matters as our own. With over 800 experts and more than 2,000 customers, we have vast experience with facilitating the smooth operation and growth of small to large-scale, global businesses.
About Accace Circle
Accace operates internationally as Accace Circle, a co-created business community of like-minded BPO providers and advisors who deliver outstanding services with elevated customer experience and erase the borders of service delivery. Covering over 50 jurisdictions with nearly 2,500 professionals, we support more than 15,000 customers, mostly mid-size and international Fortune 500 companies from various sectors, and process at least 200,000 pay slips globally.
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