As one of the leading economies in the European region, the United Kingdom attracts many foreign investors all the time. However, setting up a business in the UK as a foreigner could be a tricky task, considering the different visa requirements for different nationalities. In this guide, we will look at some of the most important considerations when planning to set up a business in the UK as a foreign investor.

Step number 1 – decide the legal structure of the company

Once an investor has a clear idea about the visa requirements applicable to his or her nationality, the next step is to decide the type of company he or she needs to establish in the UK. The most popular structure for foreign investors is the private limited company structure, but there are several other options to choose from as well.

  1. Public limited company
  2. Limited liability partnership
  3. Branch

Depending on the legal structure of the company an investor chooses, there are certain minimum thresholds to be met. Understandably, setting up a public limited company in the UK is the hardest for a foreign investor, as there are various regulatory requirements to be met before being able to trade shares publicly on the London Stock Exchange or the Alternative Investment Market.

Opening and setting up a branch is valid for a foreign investor who already has an established business outside the United Kingdom. The new branch should be registered with the Companies House in the UK, and the financial reports of the parent company should also be filed with the relevant authorities in the UK on an annual basis.

These are the different types of legal structures that an investor can choose from when planning to set up a business in the UK as a foreign investor, and the focus should be on identifying the legal structure that accurately reflects the size of the business and the nature of business operations.

Step number 2 – registering the company

Upon deciding the legal structure of the company, the next step is to register the company with relevant authorities in the United Kingdom. In order to register a company with the Companies House, a business name should be decided. However, this business name cannot be similar to a one that already exists, and the availability of a particular business name can be checked online. One a business name is determined, there are several documents that need to be submitted to the Companies House to complete the business registration process.

Among the most important documents and details required to set up a company in the UK as foreign investors are;

  1. The Articles of Association and the Memorandum of Association
  2. Legal name of the business
  3. Shareholders list inclusive of the names of directors
  4. Address of the company

Business registration process should not be difficult given that the foreign investor has all the documents needed in place. A better option at this point in time would be to hire a consulting firm that specializes in setting up businesses in the UK as their insight will come in handy to complete the business registration process hassle free.

Step number 3 – Registering with the HMRC for taxes

Registering with the relevant authorities to submit tax files is something many investors would love to leave behind as the last thing in the business establishment process, but an important one. Failure to submit accurate tax returns and files will result in hefty penalties from the HMRC; a situation no foreign investor needs himself to be in.

Once registered with the Companies House, a Unique Taxpayer Reference (UTR) number would be provided to the foreign investor, and this is required to register with the HMRC for tax purposes. There is a deadline of three months from starting the business in the UK to register with the HMRC for tax purposes, and it’s better to complete the process at the very earliest to account for any delays that might adversely impact the time it would take for your business to be registered with the HMRC.

A guide that should be followed can be found on the UK government website.

Following above steps, a foreign investor can set up a business in the UK as a foreigner. The process is virtually hassle free, and an overseas investor can complete the company registration process online. In order to do this, the foreign investor should contact a company formation consultant based in the United Kingdom, and the process could be completed easily with the guidance of such an experienced consultant.

Above steps should be followed when setting up a business in the United Kingdom as a foreigner, and another important consideration is whether you need to open a bank account in the name of the business. While it is not necessary, the best practice is to open a bank account under the name of the business as it separates an investor’s personal finances from that of the newly established company. In addition, maintaining a bank account under the name of the business can open doors for financing options, higher reputation, and higher credibility as well.

Setting up a business in the UK as a foreign investor is not a difficult task, but at the same time, there are certain formalities associated with doing so, and there are steps that need to be followed by an investor. As such, the best decision would be to hire a UK based consultant who has extensive experience in setting up companies for foreign investors.

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