ESTABLISHING A COMPANY IN ENGLAND, HOW TO DO IT

ESTABLISHING A COMPANY IN ENGLAND

One of the many advantages of establishing a company in England is the benefit of a competitive tax system..

Additionally, setting up a business in the UK is ideal due to its economic and political stability, as well as its legal framework, which protects investors.

Throughout this article, we provide information on the types of businesses in the UK and the legal requirements for establishing one.

1 Establishing a Company in England, Types of company in UK

2 Steps for Setting up a Company in the UK

3 Tax obligations

4 Conclusion on establishing a company in England

1 Establishing a Company in England, Types of company in UK

According to your needs, some legal structures will be more suitable than others. Therefore, we begin the article by detailing the main types of company in UK.

Partnership

They can be established by two or more individuals.

The three main types are the General Partnership (GP), the Limited Partnership (LP), and the Limited Liability Partnership (LLP).

The General Partnership is the simplest form, where partners share management, profits, and have unlimited liability. This means they are personally liable for the company’s debts with both their present and future assets.
On the other hand, in a Limited Partnership, at least one partner has unlimited liability, while the others’ liability is limited to the amount they have contributed.
Finally, the third type, the Limited Liability Partnership (LLP), limits the liability of all partners to their respective contributions.

All of these must be registered with Companies House and comply with tax regulations.

Private Limited Company (Ltd Company)

This is the most common legal structure among all types of company in the UK.

It is therefore the most commonly adopted form of company for small businesses. Shareholders’ liability is limited to the capital they invest, and they must submit annual reports.

The UK does not require a minimum capital for establishing a company in England, but businesses must meet accounting and tax requirements.

Public Limited Company (PLC)

This type of company is suitable for large companies. They are the legal form for companies listed on the stock exchange.

To form a PLC in the UK, you require a minimum capital of £50,000.

Being a company where shareholders can sell their shares to the general public, it is subject to a more thorough level of oversight than a LTD Company.

2 Steps for Setting up a Company in the UK

1 Register the company with Companies House. The required documents for a LTD Company are:

Memorandum of Association (a declaration of intent to form the company).
Articles of Association (the company’s internal rules).
Form IN01, which includes details of directors, shareholders, and the registered address.

2 Obtain the Unique Taxpayer Reference (UTR).

Once you have registered your company, HM Revenue & Customs (HMRC) will assign you a UTR number, which is used to pay taxes in the UK.

3 Register with HM Revenue & Customs (HMRC).

After receiving the UTR, the company must register with HMRC. You must do this within three months.

4 Register the company for VAT.

If the company’s annual turnover exceeds £90,000, this registration is mandatory.

5 Opening a business bank account.

Although not a mandatory requirement, it is highly advisable to open a UK bank account to separately manage the company’s finances. The Revolut bank account is a good option.

3 Tax obligations

The tax system in the United Kingdom is competitive, meaning that the taxes businesses pay align with those of other countries.

The main taxes levied on a company are as follows:

Corporation Tax is the tax paid by companies in the UK. It is calculated by applying a percentage to the profits. Currently, this percentage ranges from 19% to 25%.

VAT (Value Added Tax) is an indirect tax on goods and services, which businesses collect on behalf of the tax authorities.

PAYE y National Insurance Contributions (NICs) apply to employers who pay salaries to employees. PAYE is the income tax withholding on employees’ wages, while NICs are contributions to social security.

4 Conclusion on establishing a company in England

The United Kingdom is a country that offers legal security and ease of establishment to entrepreneurs and business owners.

For this reason, the process of establishing a company in England is straightforward and simple.

Moreover, as we’ve seen, there is no need to invest a large sum of money.

Nevertheless, we recommend consulting with experts who specialise in the field to assist with your project.