Company Registration in United Kingdom

A major draw for firms from all over the world has always been the United Kingdom’s business-friendly infrastructure, first-rate facilities, good administration, and efficient application of laws and regulations. London, the nation’s capital, is one of the world’s principal financial hubs. The UK operates as a magnet, drawing in some of the best talent from around the globe. The industries and businesses are supplied by this attraction with a qualified and skilled personnel. Also, especially in former colonial nations, the majority of nations have legal systems that are comparable to those of the UK, making it simpler for business owners to establish operations that integrate well into the British economy.

Benefits of Company Registration in the United Kingdom

• Tax advantages

The United Kingdom takes pride in having the largest network of double tax treaties, which provides incentives to businesses around the world to establish their operations there. Also, its tax structure provides a number of tax breaks for fintech and technology enterprises.

For all businesses in the UK (apart from ring fence companies), the corporate tax rate is 25% if the annual revenue exceeds £250,000. Businesses that have marginal relief available for earnings up to £250,000 and yearly profits under £50,000 must pay tax at a rate of 19%. These prices will take effect on April 1st, 2023.

• one of the biggest and most active global markets-

The UK takes pleasure in having one of the biggest and liveliest economies in the world, especially in Europe. It serves as a top-notch entryway to the rest of the planet. The following benefits are available to international investors that invest in the UK:

1. The World Bank’s “Ease of Doing Business” report gives it a very good ranking because it just takes 24 hours to register a corporation in the UK. Only one shareholder and one director are needed to form a company, and the appointment of a company secretary is optional for the registration of private corporations in the UK. There is no minimum capital requirement.
2. It is simpler for these businesses to mimic the legal system because it shares a great deal of similarities with the systems used throughout the world.
3. The UK provides a strong business ecosystem to help organisations and establish enduring firms.
4. The UK attracts a lot of top-tier talent, creating a sizable pool of market-ready workers. This is mostly due to the close ties that exist between prestigious academic institutions and industry.
5. It offers a central time zone position and is advantageously positioned halfway between the East and the West.
6. It is also one of the world’s principal financial hubs.
7. Also, it provides the best setting for conducting research and development.

• Ideal environment for International Holding Companies –

Due to the following advantages, the United Kingdom’s legal system presents itself as an excellent venue for multinational holding companies:

1. Under UK tax legislation, the majority of dividends received from foreign sources are deductible. Depending on a few factors, such as whether the organisation is a small, medium, or large corporation, tips received by UK companies are exempt.
2. No withholding tax is applied to the distribution of dividends paid to shareholders or parent firms, regardless of the shareholders’ and parent company’s residency status.
3. The paid-up or issued share capital is not subject to any taxes. The amount of stamp duty paid, which is only 0.5%, is also quite low.

• Capital Gains Tax Exemptions –

The disposal of a “substantial shareholding” in a trade company or holding company of a trading company or other corporations is not subject to capital gains tax under the tax laws of the United Kingdom. A substantial shareholding is one in which at least 10% of the common stock has been held for a continuous period of 12 months in another corporation in the six years prior to the sale.

Moreover, relief has been offered in the case of the sale of shares in corporations that the Qualified Institutional Investors specifically possess (QIIs).

Regulatory Authority/ Body for Company Registration in the United Kingdom

The Companies Registry of the UK, also known as Companies House, is the main regulating body for company registration in the United Kingdom.

Eligible Business Structures under Company Registration in the United Kingdom

Limited and unlimited businesses, private and public companies, corporations limited by shares and share capital, and community interest companies are all recognised under the United Kingdom’s 2006 Companies Act. Nonetheless, the five main types of companies that are frequently used by firms to conduct business in the United Kingdom are as follows:

1. Individuals’ Limited Liability Company
2. public company with a share limit
3. Private Limited Liability Company

• Unrestricted Private Corporation

1. The following are a some of the less popular business structure types used in the UK:
2. Unregistered Community Interest Corporation

• Private Company Limited by shares –

In the United Kingdom, the most typical sort of business entity is a private company limited by shares. Private firms limited by shares make up over 95% of all companies registered in the UK. The words “Limited” or “Ltd.” must be added at the end of any private company limited by shares’ name. Since there is no minimum share capital required by law for these businesses, anyone can launch one with just £1. The amount of outstanding shares that the shareholders own determines their obligation. The amount paid up on the issued shares is not subject to prescription. These businesses cannot sell their shares to the general public.

• Public Company limited by shares –

The ability of a public company, often known as a “PLC,” to make its shares accessible to the general public through the stock market in order to obtain cash for the business, makes it a preferred corporate structure for large corporations. Once more, the shareholders’ financial responsibility is only as great as the number of unpaid shares they now own. The minimum share capital required by law to form a public company limited by shares is £50,000. Additionally, at the time of share allocation, a minimum of 25% of the nominal value and the full amount of any premium due on the issued shares must be paid up. At the time of registration, these businesses must appoint at least two directors and a company secretary in accordance with the law.

• Private Company Limited by Guarantee –

In this kind of business, there is a predetermined sum that the company will pay to its creditors in the event that it closes. For reasons such as charity, education, clubs, unions, etc., non-profit organisations typically use this type of company structure. These businesses have no shareholders and have no share capital. The guaranteed sum might be as little as £1, and the shareholders are the members of the firm.

• Private Unlimited Company-

The distinguishing characteristic of this kind of corporation is that there is no cap on the potential financial responsibility that may accrue to the members of the company in the event that the firm fails. Only businesses that are certain there is no risk of insolvency may use this type of structure. Also, these businesses are not required by law to submit their annual reports to Companies House.

• Branch Office (Registered UK establishment)-

An international company’s UK registration takes the form of a branch office or registered UK establishment. It lacks a distinct legal identity, and the overseas company’s directors and stockholders continue to control its affairs. This organisation can be registered in the UK as an alternative to doing so for a distinct corporation. To operate as a branch office in the UK, a UK establishment must be registered with Companies House. The directors’ and authorised representatives’ names must be made public.

It is merely a local representation of an international business in the UK. Within one month of your business’s UK opening, you must register with Companies House. The cost of registration is determined by where the foreign firm is registered. Similar to those of a private limited business in the UK, it has reporting responsibilities. Its liability is governed by the regulations of the foreign company, and registration requires a physical address in the UK. Just the amount of earnings made by the UK-based establishment must be paid in taxes.

• Businesses with a Common Interest (CIC) –

A community interest business is a specific kind of private limited company that was formed to carry out community-based activities. Even if it is a non-profit organisation, it still needs to make money in order to stay afloat and use the proceeds for the sake of the community rather than for private gain.

• Unregistered Businesses:

These businesses haven’t been registered with the government under the Companies Act of 2006 or any other law. Instead, they are established by means of Royal Charters or Private Acts of Parliament.

Procedure for Company Registration in the United Kingdom

A potential applicant must adhere to the following procedure in order to register a company in the UK:

• determining whether the Limited Company form is appropriate for your company
• Picking a suitable name for the business
• selecting the business’s directors and company secretary
• Choosing the company’s shareholders or guarantors
• preparing the necessary paperwork to run the business
• keeping the company’s necessary records up to date
• Organizational registration

• Checking if the Limited Company structure is right for your business-

Finding out whether the business structure is appropriate for the commercial activity the entrepreneur wants to engage in is the first stage in registering a company. Also, the taxation structure of the business organisation should be taken into consideration while forming a corporation. The best option for a foreign investor is to either open a subsidiary in the form of a private limited company limited by shares or establish a branch office of an overseas company (where the foreign company operates directly from outside and bears all the responsibilities of the debts and obligations of its branch office) (where the subsidiary is a separate legal entity and bears its own responsibilities).

• Choosing an appropriate name for the company –

The choice of a suitable name for the business must also be made by the promoters. No other registered company should share the same name. Either “Limited” or “Ltd.” should conclude the firm name. The names “Cyfyngedig” and “Cyf” should be included to the company names that are supposed to be registered in Wales. The corporate name cannot be derogatory. Unless approval is acquired from the government for the same, it cannot contain a “sensitive” term or expression and should not imply any link with the government or local authorities.

The option to choose a trading name other than the company’s registration name has been made available by the corporations. The term “business name” refers to this name. The terms “Limited,” “ltd.,” “LLP,” “Limited Liability Company,” “Public Limited Company,” or “plc” should not be used in such a business name. A sensitive phrase or word should not be used in the name unless prior authorization has been obtained from the appropriate authorities. Also, the firm name shouldn’t be utilised in the name if it is close to the name of another company’s trademark.

A firm cannot use “Limited” or similar equivalents with its name if it has been registered as a charity or limited by guarantee and its articles of association show that it has been registered to promote or govern art, religion, commerce, education, charity, or any other profession.

• Choosing the Directors and Company Secretary for the company –

For the purposes of registering their company, the promoters are required under the Company Law to appoint at least one director. However, the appointment of a company secretary is not required at the moment of incorporation.

Directors: In accordance with the law, a company’s directors are in charge of managing its operations and ensuring that its financial records and reports are accurate. A person must be older than 16 and not be barred from serving as a director of a firm in order to be eligible to become a director.

There is no legal need that a director must reside in the UK. The company’s registered address must be in the UK, though. Companies House makes the names and contact details of the directors available to the public. Each Director shall give a service address or a correspondence address, both of which shall be disclosed to the public. A director may request that the Companies House remove their address from the record if they utilise it.

A private limited company does not require the appointment of a company secretary. Yet, some businesses appoint them to assume the duties of the company’s director. It should be mentioned that a company secretary can serve as a director but cannot advance to the position of:

• auditor for the business
• a “undischarged bankrupt,” unless the court has granted permission.

It is important to keep in mind that even if a corporation names a company secretary, the directors are still legally liable for the firm.

• Deciding on the shareholders or guarantors of the company –

It is up to the corporations to decide who will be their shareholders and guarantors.

Typically, shares are used as a form of capitalization, and shareholders with certain rights own the companies. The majority of businesses issue “ordinary shares,” which confer one vote per share and dividend payments upon the directors. All limited liability firms must have a minimum of one shareholder or guarantor, who may also serve as a director of the business. A individual can own 100% of the stock of a corporation if they are the only shareholder.

The maximum number of stockholders is unrestricted by law. The shareholders must pay the full value of their shares if the business must be shut down. When a corporation is registered, the following information must be included in the statement of share capital (information about the shares):

• The entire number of shares in the corporation, their categories, and their value are all listed (known as the share capital)
• the shareholders’ names and addresses (known as subscribers and members)

• Keeping the necessary records for the company

– It is important to keep in mind that, in order to register as a limited company in the UK, the company is required to keep certain records about its employees and business affairs. HM Revenue and Customs (HMRC) has the authority to check the company’s compliances and determine whether the appropriate amount of tax is being paid by the company. These documents are listed below:

• information about the business itself
• Company financial and accounting records

• Records of the company: The following information must be kept with the company:

Shareholders, corporate secretaries, and company directors

outcome of shareholder votes and corporate resolutions

Future loan repayment commitments made by the business and the party that will receive them (debentures)

Promises made by the business to compensate the receiver in the event that something goes wrong owing to the business’s error (indemnities)

1. Transaction history for the company’s shares purchased
2. mortgages and loans backed by the company’s assets

‘People with Significant Control’ Register: This record must contain the following information on the people who:

1. possess more than 25% of the company’s voting rights.
2. can appoint or dismiss a majority of the company’s directors
3. able to direct and affect the business
4. It should be highlighted that even in the absence of individuals exercising significant control, the aforementioned record must be kept.

Accounting Records: The following information should be included in the company’s accounting records:

1. The money received and spent on the business, including any grants that were obtained by the business
2. Stocks owned by the company at the conclusion of the fiscal year Debts of the company
3. All products that the business and the recipient have purchased and sold

• Organizational registration

The company must choose the SIC code that best describes the types of activities it performs and register an official location for the company in order to complete the final registration process.

Physical Address: Registering a formal address for the company is done so that it can receive all written correspondence given to it. The address needs to be a physical one in the UK and belong to the same nation as the company’s registration address. A PO Box is acceptable, but you must also provide a physical address and a postcode. The online register must make this location accessible to the general public.

If you don’t want your company’s address to be public, you can use an alternative address or designate an agent who will provide you with a different address. When registering the company, a physical address is required.

SIC Code: To categorise commercial premises according to the kind of economic activity the company is involved in, you must always use the SIC codes from the condensed list accessible from the Office of National Statistics (ONS). The Companies House must get the proper SIC code in order for the application to be accepted.

Registration: The promoters will receive a “certificate of incorporation,” which serves as official proof that the company has been registered and is now in existence.

Corporate Tax in the United Kingdom

For all businesses in the UK (apart from ring fence companies), the corporate tax rate is 25% if the annual revenue exceeds £250,000. Companies earning under £50,000 annually must pay a 19% tax with marginal reduction available for profits up to £250,000. These prices will take effect on April 1st, 2023.

Documents for Company Registration in the United Kingdom

Via the e-Business platform, a company can be electronically registered. The founders of the firm have the option of physically registering the company with the aid of a notary if they do not want to get it registered online. The following documents, which are necessary for a company’s registration, will be aided in preparation by the notary:

1. Association Memorandum Articles of Association Form IN01
2. Information on the shareholders and guarantors, such as (place of birth, mother’s maiden name, father’s first name, telephone number, national insurance number, passport number), is required in the case of an overseas company.

The following are some more methods the promoters can use to register the company:

1. via posting
2. Using an Agent
3. Promoters who use third-party software must utilise Form IN01 to postally register their business.

Also, the business must register for Corporate Tax within three months of opening. Typically, when a company registers with Companies House, the promoters also file for Corporation Tax. After the business has been incorporated with Companies House, the promoters can register separately with HM Revenue and Customs (HMRC) if they are unable to do so with Companies House.

documents required for an overseas company’s registration

• the name of the international business
• Information about the accounts and legal papers
• Address of the principal location of business and registered office
• Company objectives Amount issued as share capital
• Information about the overseas company’s officers
• documents needed to register a branch office (Registered UK Establishment)

The branch office’s name

• Address of the Branch Office’s Registered Office

What kind of business activities will the company engage in?

Representative of the UK government in perpetuity

Which business structure is recommended in the United Kingdom?

A private limited company is the finest type of business to choose for company registration in the United Kingdom since it offers the founders limited liability benefits equal to the amount of share capital invested in the business.

How much does it cost to register a business in the UK?

In the United Kingdom, the state charge for a company’s incorporation varies from case to case. It costs £12 to register a business online; nevertheless, it costs £40 to start a business via postal applications.

How long does it take to form a business in the United Kingdom?

Where a corporation is registered online, the registration process only takes 24 hours. In contrast, it takes roughly 8–10 days to register a company in the UK if the application is submitted by mail and payment is made by check.

Is a local director required in order to register a company in the UK?

No, there is no need to designate a resident director in the UK. According to the law, a corporation is only required to have a registered physical location in the nation (within the United Kingdom) where it wants to be registered.

Will Brexit have any impact on how a company is registered in the UK?

The UK departed the European Union on January 31, 2020, and the transition period began at the end of the year. The UK’s procedures for registering businesses haven’t changed significantly, though.

How many shareholders are needed in the UK to register a private limited company?

In the United Kingdom, a private limited company must have a minimum of one shareholder. However, a UK-registered establishment is exempt from this requirement (branch office of an overseas company).

What amount of share capital is necessary to form a business in the United Kingdom?

In order to register a private limited company in the United Kingdom, there is no legal minimum share capital required. Any donation above £0 is acceptable. Parallel to this, there is no such requirement in the case of a Registered UK establishment (branch).

What are the advantages of registering a business in the UK?

A number of tax advantages, particularly for small countries, the advantages of a large number of double tax avoidance treaties, tax exemptions for holding companies, capital gains tax exemptions, and a vibrant market are all advantages of company registration in the United Kingdom.

What is the United Kingdom’s business tax rate?

For all businesses in the UK (apart from ring fence companies), the corporate tax rate is 25% if the annual revenue exceeds £250,000. Companies earning less than £50,000 per year must pay a 19% tax with marginal reduction available for profits up to £250,000. These prices will take effect on April 1st, 2023.

How long must a business keep its records current in order to operate in the UK?

Records for the company must be kept for at least six years after the end of the most recent company financial year to which they pertain.