NOTE FOR INCORPORATING A COMPANY IN UK(UNITED KINGDOM).
As discussed, please note below the detailed
1. Introduction
Planning a new business or opening a new branch overseas is always exciting, but sometimes daunting. In UK we will make sure that you are given all the support and advice you need – and more.
Starting up in UK has never been easier, with less paperwork, more help and an online service that means you can begin trading sooner than ever.
2. Choosing Business Types and Business Activities
The first steps are to choose the business type and activities, choose the right legal form and choose the location. We guide you through each step and give expert advice on legal matters, business plans and much more besides.
2.1 Choosing Business Types and Business Activities –
Businesses fall into three categories:
1. Sole trader
2. Limited company
3. Ordinary’ business partnership
4. Limited partnership and limited liability partnership
5. Unincorporated association
You must be clear on all of your business activities, as some companies will undertake several activities under one business license. To help you decide, we provide a full list on the legal Structure of some companies.
Sole traders :
If you start working for yourself, you’re classed as a self-employed sole trader- even if you’ve not yet told HM Revenue and Customs (HMRC).
As a sole trader, you run your own business as an individual. You can keep all your business’s profits after you’ve paid tax on them.
You can employ staff. ‘Sole trader’ means you’re responsible for the business, not that you have to work alone.
You’re personally responsible for any losses your business makes.
Tax responsibilities
You must:
• send a Self Assessment tax return every year
• pay Income Tax on the profits your business makes
• pay National Insurance
You must also register for VAT if you expect your takings to be more than £81,000 a year.
Limited company :
A limited company is an organisation that you can set up to run your business – it’s responsible in its own right for everything it does and its finances are separate to your personal finances.
Any profit it makes is owned by the company, after it pays Corporation Tax. The company can then share its profits.
Ownership
Every limited company has ‘members’ – the people or organisations who own shares in the company.
Directors are responsible for running the company. Directors often own shares, but they don’t have to.
Legal responsibilities
There are many legal responsibilities involved with being a director and running a limited company.
Types of company
1. Limited by shares
Most limited companies are ‘limited by shares’. This means that the shareholders’ responsibilities for the company’s financial liabilities are limited to the value of shares that they own but haven’t paid for.
Company directors aren’t personally responsible for debts the business can’t pay if it goes wrong, as long as they haven’t broken the law.
2. Private company limited by guarantee
Directors or shareholders financially back the organisation up to a specific amount if things go wrong.
3. Public limited company
The company’s shares are traded publicly on a market, such as the London Stock Exchange.
You can also consider setting up a private unlimited company as an alternative legal structure. Directors or shareholders are liable for all debts if things go wrong.
Tax responsibilities
Every financial year, the company must:
put together statutory accounts
send Companies House an annual return
send HMRC a Company Tax Return
The company must register for VAT if you expect its takings to be more than £81,000 a year.
If you’re a director of a limited company, you must:
Fill in a Self Assessment tax return every year
Pay tax and National Insurance through the PAYE system if the company pays you a salary.
Ordinary’ business partnership :
In a business partnership, you and your business partner (or partners) personally share responsibility for your business.
You can share all your business’s profits between the partners. Each partner pays tax on their share of the profits.
Partnerships in Scotland (known as ‘firms’) are different, and have a ‘legal personality’ separate from the individual partners.
Legal responsibilities
You’re personally responsible for your share of:
• any losses your business makes
• bills for things you buy for your business, like stock or equipment
You can set up a limited partnership or limited liability partnership if you don’t want to be personally responsible for a business’ losses.
A partner doesn’t have to be an actual person. For example, a limited company counts as a ‘legal person’, and can also be a partner in a partnership.
You must choose a name for your partnership and register it with HM Revenue and Customs (HMRC).
Tax responsibilities
The nominated partner must send a partnership Self Assessment tax return every year.
All the partners must:
• send a personal Self Assessment tax return every year
• pay Income Tax on their share of the partnership’s profits
• pay National Insurance
The partnership will also have to register for VAT if you expect its takings to be more than £81,000 a year.
Limited partnership and limited liability partnership
Your liability for business debt differs depending on whether you’re a limited partnership or limited liability partnership (LLP).
You can share all the business’s profits between the partners. Each partner pays tax on their share of the profits.
1. Limited partnerships
The liability for debts that can’t be paid in a limited partnership is split among partners.
Partners’ responsibilities differ as:
• ‘general’ partners can be personally liable for all the partnerships’ debts
• ‘limited’ partners are only liable up to the amount they initially invest in the business
General partners are also responsible for managing the business.
2. Limited liability partnerships (LLPs)
The partners in an LLP aren’t personally liable for debts the business can’t pay – their liability is limited to the amount of money they invest in the business.
Partners’ responsibilities and share of the profits are set out in an LLPagreement. ‘Designated members’ have extra responsibilities.
Tax for limited liability and limited partnerships
Every year, the partnership must send a partnership Self Assessment tax return to HM Revenue and Customs (HMRC).
All the partners must:
• send a personal Self Assessment tax return every year
• pay Income Tax on their share of the partnership’s profits
• pay National Insurance
You must also register the partnership for VAT if you expect your business’s takings to be more than £81,000 a year.
Unincorporated association:
An ‘unincorporated association’ is an organization set up through an agreement between a group of people who come together for a reason other than to make a profit, eg a voluntary group or a sports club.
You don’t need to register an unincorporated association, and it doesn’t cost anything to set one up.
Individual members are personally responsible for any debts and contractual obligations.
If the association does start trading and makes a profit, you’ll need to pay Corporation Tax and file a Company Tax Return in the same way as a limited company.
If you need further help, you can always
3. Choosing the Legal Form for Business
When you select a legal form for your business in UK, you must take into account the business type, business activities, the number and the nationality of owners and the ownership options. There is a wide range of legal forms to help you choose the one that is right for your business.
These include sole Trader, Limited Company, Ordinary Business Partnership, Limited Partnership/LLP and many more. For full explanations of all the options we have mention in above points.
4. Choosing Business Location
Choosing the right location for a new company is one of the most important factors for and different advantages depending on your business type and activities.
5. Deciding Ownership Rights
Ownership rights can differ, depending on the type of business and business activities and the location of you business.we have already mention as above in point No.2
However, business ownership and operational control are two separate matters.
In reality UK nationals and their overseas partners can agree between themselves how profits can be shared and how business decisions are ultimately made.
This means even if overseas business owners set up their businesses in Dubai mainland they will still have a full control on their business operations.
6. UK Tax Obligations for Non-Resident Landlords :
Profits deriving from UK rental receipts are taxable in the UK on non-resident landlords as they derive from a UK-situs asset. As such all non-resident individuals and entities have a UK tax filing obligation and will be subject to UK tax on rental profits.
Appropriate structuring may serve to reduce the overall rate of tax payable and advice should be taken in this regard (please ask us for our briefing sheets on property structuring). However, the general basis of taxation of rental income is as follows:-
• Non-resident individual owner – at a rate of between 20% and 45%
• Non-resident company – at a rate of 20%
• Non-resident discretionary trust – at a rate of 45%
Filing obligations of non-resident landlords
Non-resident individuals, non-resident companies and trustees of non-resident trusts in
receipt of UK rental income have an obligation to register with HM Revenue & Customs (HMRC) and file a Self-Assessment Tax Return each year declaring any UK rental income.
Failure to register and file UK tax returns may lead to the non-resident landlord becoming liable to penalties and interest in respect of late payment of UK tax or late filing of returns.
Non-Resident Landlord Scheme (NRLS)
The NRLS is the mechanism by which HMRC collects the tax due on the UK rental income of non-resident landlords. Non-resident landlords are individuals, companies or trustees who receive rental income from property owned in the UK and whose “usual place of abode” is outside the UK.
The scheme requires UK letting agents (or tenants if the weekly rent exceeds £100 and no letting agent is appointed) to deduct basic rate tax (currently 20%) on any rental income they collect on behalf of non-resident landlords and pay this tax over to HMRC on a quarterly basis.
Non-resident landlords can offset any tax deducted under the NRLS against their tax liability when they complete and file their UK Tax Return.
However, it is not necessary for letting agents or tenants to deduct tax from rental income of a non-resident landlord if HMRC informs them by letter that the landlord is approved to receive the rental income gross.
Approval to receive rental income with no tax deducted
Non-resident landlords may apply to HMRC for approval to receive rental income gross in cases where either:
• Their UK tax affairs are up to date;
• They have not previously had any UK tax obligations; or
• They do not expect to be liable to UK income tax for the year in which they apply.
The application must be made to HMRC’s Personal Tax International department using the necessary form depending on whether the non-resident landlord is an individual, a company or a trustee. Applications by individuals can be made no more than three months before the individual leaves the UK, where appropriate.
HMRC may approve an application by notice in writing to the non-resident landlord provided that the application form is completed correctly and it is satisfied that the non-resident landlord making the application will comply with his or her UK tax obligations.
If the application is successful, HMRC will also issue a separate notice to the letting agents or tenants authorising them to pay rental income to the non-resident landlord without deducting UK tax.
Withdrawal of approval
HMRC may withdraw approval by issuing notice to the non-resident landlord if:
• It ceases to be satisfied that the information provided in the original application is correct;
• It is no longer satisfied that the non-resident landlord will comply with their UK tax obligations; or
• The non-resident landlord fails to provide the information requested by HMRC.
The notice will state the reason for the withdrawal and the date from which it is effective. The landlord will have 90 days from the date of the notice to appeal the withdrawal.
Company Formation Checklist
You will need the following information at hand to complete your formation:
1. Registered Office Address
This address will be used for statutory mail from Companies House and HM Revenue & Customs. Your registered office cannot be a PO Box and must be in the UK.
2. Director Details
• Full Name
• Date of Birth (Must be at least 16 years old)
• Occupation
• Nationality
• Residential Address
• Service Address (residential or other address)
• Three Security Details (these act as an online signature)
o First three letters of mother’s maiden name
o First three letters of father’s forename
o First three letters of eye colour
3. Shareholder Details
• Full Name
• Contact Address (residential or other address)
• Three Security Details (these act as an online signature)
o First three letters of mother’s maiden name
o First three letters of father’s forename
o First three letters of eye colour
Extra Help
Before anything else, you need to think through your business idea and develop a business plan that shows exactly what you want to do and how you want to do it. If you need extra help, simply contact us -02024570055 or book an appointment @ www.csladda.com
We have helped thousands of large and small business owners to set up UK and would be delighted to help you too.
When you have considered all the options and made your choices, you are ready to apply for a business license.
If any query, please feel free to contact.
Thanking you and assuring best professional services.
