Britain has always has always loved revolutionizing the old guard. The fashion, music and comedy scenes have all benefited from the particular brand of humour and the love of the contrary that is deeply ingrained in the British psyche. Now that radical sensibility has transferred itself to the startup scene which is a lively hub of bright young things, welcoming and nurturing big and small startups alike. Mega brands such as Google and Spotify have already staked their claim on British soil, but the small guys can also get a look in thanks to some juicy government incentives – startup loans for graduates, Entrepreneurs Relief, corporate tax reductions, plus the chance for angel investors to claim back losses if a startup goes belly up.
In 2014, the British Prime Minister David Cameron announced changes in the tax system which saw the corporation tax decrease from 24% to 21%. And with the extra sweetener of a low rate of 20% for small businesses with small profits, that puts Britain on track to have one of the lowest corporation tax rates in the west. Something that would make any British businessman raise his pint glass for.
Swings & Roundabouts
Thanks to this low tax rate and the ultra-streamlined system which makes it easy to register your company, the number of foreign companies that expanded into the UK doubled in the year 2014. The UK attracts more inward investment from Asia and the US than any other European country and with a time-zone that is more compatible to financial big-hitters like China and India, the UK is a prime location for new businesses. Many tech businesses are clustering around the Shoreditch area of East London, so much so they’ve nicknamed it Silicon Roundabout. (That’s another thing the Brits love – a nice planted roundabout sponsored by a local business.)
So if you couple all those advantages with a startup rate that betters America – almost half a million people started a new business in the UK in 2012, an increase of 10 percent over 2011 despite the economic climate – then you have some excellent reasons to hail a London black cab and head straight into the capital with your business plan firmly clamped under your arm.
So how do you go about creating a company in the UK? First of all you need to identify what type of business structure you need. The main types of company available in the UK are:
• private limited company (Ltd)
• public limited company (Plc)
• branch of a foreign company
• limited liability partnership
By far the most popular format for foreign investors is a limited company. The reason being is that only one shareholder is needed, there is no minimum capital required, only one director and one company secretary is required and all the accounts can be filed annually.
If you already own a company and just want to expand to the UK, you can open a branch which allows you the freedom of keeping your structure and legalities intact on your side of the pond, while you reap the rewards from an expanded clientele on the other. One of other big advantages of opening a UK company is that you don’t have to be physically present to take advantage of the legal and tax benefits. Virtual offices are widely available and calls can be forwarded or a message taken for you. That means you can sit back and have a nice cup of tea (preferably English Breakfast or Earl Grey) and pick up the messages at your leisure in your home country.
Banking On It
Although the City of London has always been regarded as one of the world’s foremost financial centers, those black and white images of bankers in bowler hats are now a thing of the past. With all the technological advancements in the banking system, Britain can now offer a range of sophisticated banking facilities to the business community. British banks are very keen to work with foreign companies and so the system is relatively easy compared to other countries. All the bank usually requires is one face-to-face meeting and two certified forms of identification (two utility bills that are less than three months old) and a passport. For those outside the EU who want to qualify for an actual work permit or business visa you would need to prove you can support yourself financially. The good news is that the visa situation that scuppered so many business people’s dreams has now been made smoother with the introduction of Entrepreneur Visas.
Entrepreneur Visas allow foreign nationals to start a business in the UK and can even earn the applicant a fast-track to UK citizenship, providing the strict requirements on funding, job creation and turnover are met. Entrepreneur Visas are more frequently granted to English-speaking citizens such as Americans and Australians or from countries with large expat communities in the UK such as China, Pakistan and India, but if your application is in tip-top condition then you have as good a chance as any.
After totting up all those advantages, the UK is currently the country where foreign business people are flocking to base their startups. They might still need that umbrella to shield themselves from the drizzly British weather, but they might also need to think about packing a pair of sunglasses now their future is looking a whole lot brighter.