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Company Registration in the United Kingdom
The United Kingdom plays an important role in international trade and economy. This is one of major European leading business center, that attracts more than 35% of all foreign investment in Europe. It has an open economy and one of the lowest tax rates. This is one of the major financial and investment center with various large companies having headquarters there. The UK offers cultural and ethnic diversity, high-quality workforce, endless business opportunities and access to high-technology and innovative sectors. According to various rankings, the UK is among top countries for ease of doing business which means that the company formation and starting new business operations for your company in the UK will bring you comparatively low expenses and opportunities for starting your business rather easily without unnecessary formalities. Of course, the UK legal system is highly regulated, but its regulations are tailored to business needs and provide good opportunities for business growth. Despite the Brexit, the UK remains to be a stable business environment with overseas investment approach. It will probably remain even more attractive for foreign businesses in the upcoming years as its economic will be highly dependable on investments.
This article gives you an overview on how to set up a company in the UK and key points on how your business can benefit from it.
What types of legal entities is it possible to incorporate in the UK?
Foreign companies and citizens may register the company in the UK in the following types:
- Limited companies: is either a private limited company (Ltd) or a public limited company (PLC). A private limited company is the most popular type for company formation in the UK. This legal form is chosen as it can be set up by at least one shareholder who is not personally liable for company’s debts. Besides, it is managed by one director and there is no need to have a secretary unless otherwise provided in its articles of association. There is no requirement in relation to a minimum or maximum authorised or issued share capital.
A public limited company is tailored for large businesses as a PLC is owned by at least two shareholders and at least two directors. Minimum issued share capital is £50,000 and it has to be paid up in no less than 25% in order to start operating.
- Partnerships: are divided into two forms, being a limited partnership and a limited liability partnership. Limited partnerships are formed by at least one general partner and one limited partner who have different obligations in terms of business debts. LLPs are set up by at least two or more members who are not personally liable for any debts that the company is not able to pay. Usually partnerships are used by professional service firms, such as accountants, lawyers.
- Sole traders: this is the simplest way for starting a business in the UK, though the sole trader remains personally responsible for business debts.
- Branches: are usually chosen by overseas companies wishing to have a business presence in the UK instead of incorporating a company there. The company must file annual accounts and comply with UK reporting requirements on an annual basis.
Company registration documents to be submitted depend on the type of legal entity you choose from.
How long does it take to register a company in the UK?
The term for registering a company in the UK is approximately 1 week provided that all documents are ready to be filed with the Companies House.
Tips: It is possible to file documents for registration online which will speed up the process.
How to register a company name in the UK?
There is no requirement to reserve the company’s name prior to its incorporation in the UK. In the meantime, it is necessary to follow certain rules in order to register a company name in the UK. The Companies House will refuse to register a company name if:
- the proposed name contains a sensitive word or expression;
- the proposed name is offensive;
- it implies a connection with central or local government, or with some public authorities;
- it is similar to already existing names of companies;
- it is similar to a registered trademark.
Similar names mean that they are fully identical, or differ either with only a symbol, or a word is common in the UK, or a word is identical in appearance from the existing name.
For this reason, before the company name is chosen, it is necessary to check for similar and identical names in the Registrar of Companies prior to filing registration documents. In addition, your lawyer should conduct a trademark search within registered trademarks and trademarks being in process of registration. If your company is identical to any trademark, such trademark holder can dispute your name.
Companies registered in England are ended in either “Limited”, “Ltd”, “LLP”, “plc” or other abbreviations indicating a type of the legal entity. Equivalents in Welsh are “Cyfyngedig”, “Cyf” or others for companies incorporated in Wales.
Tips: ecompany.ltd website contains searching tools that enable you to search for existing company names in the UK. Please use our website to check the last updated information on all UK companies.
What are the requirements for company names in the UK?
There is no requirement to reserve the company’s name prior to its incorporation. In the meantime, it is necessary to follow certain rules when naming your company and filing the company’s name together with incorporation documents. The Companies House will refuse to register a company name if it is offensive or implies a connection with central or local government, or with some public authorities. The company name cannot be similar to existing trade mark, and contain a sensitive word or expression. That is why it is necessary to check for similar and identical names prior to filing registration documents.
What are the requirements for shareholders and directors in a UK company?
As earlier mentioned, private limited companies have at least one shareholder and director. In relation to private limited company there is no requirement for either a shareholder or a director of the company to be resident in the UK. Public limited companies have at least two shareholders and two directors who can be of any nationality or residency.
Tips: certain amount of information about a company must be publicly available including, for example, the company’s annual accounts, registered office address and details of directors, company secretary (if there is one) and members. Please contact us for more details about nominal services.
Is it required to have a company secretary in the UK?
The Companies Act 2006 no longer requires private limited companies to appoint a company secretary. However, public limited companies are required to have a secretary with necessary skills and qualifications.
Is it necessary to have a registered address in the UK?
Yes, it is necessary have a registered address in the UK as this address is used for official communications (such as letters from HM Revenue and Customs). The information about registered address is publicly available.
What are the accounting requirements in a UK company?
A company must keep its accounting records at its registered address or other place chosen by a director. The records must be open to inspection at all times.
A financial year is usually a 12-month period for preparation of accounts. Every company must prepare accounts that report on the performance and activities of the company during the financial year.
Tips: if the company holds the account records at a place outside of the UK, it must send accounts and returns at least every six months and keep them in the UK.
In which case is it necessary to audit a company in the UK?
Private limited companies are exempt from obligatory audit. That’s said, only public limited companies are subject to audit. In addition, audit or review is mandatory if an entity exceeds certain quantitative thresholds (consolidating entities apply the thresholds to the consolidated numbers).
What is the company registration fee in the UK?
You can incorporate a company in the UK by yourself or use the services of agents.
It is possible to submit documents online. Currently, the Companies House allows to submit documents online, through the software and on paper. The statutory fee for company incorporation in the UK is £10 for documents submitted through the software and £40 for documents submitted on paper. The Companies House allows the same-day incorporation with the statutory fee of £30 and £100 respectively. Web incorporation costs £12, but no same-day incorporation is allowed.
Any other changes to be made in corporate documents, such as change of name, re-registration, capital reduction, etc, are subject to additional fees.
Alternatively, you can use agency services for company formation. Ecompany.ltd acts as an agent on behalf of its clients. We work closely with our clients to prepare all necessary documents as accurately as possible. Our fee includes payment of statutory fees to the Companies House.
Our company is experienced in preparation of all set of documents, including shareholders’ agreement. Thus, we provide all services related to company incorporation in the UK.
What is the company registration process in the UK?
- Hiring a representative (optional)
For company registration in the UK, you should decide whether you want to set up a company by yourself or use the services of an agent that will register the company on your behalf. Though you can solely submit your documents online, in certain cases it is recommended to hire an agent, who will consult you on each stage of company incorporation.
- Choosing a company name
Before you or your agent submit necessary documents, you are required to choose a company name. This is when you need an experienced agent to assist you in search for existing company names and trademarks. Even if the names are not identical, the experienced agent will advise you on whether you may have any difficulties with the name registration or in future with trademark infringement.
- Agreeing with shareholders on how to run mutual business
If you are not the sole shareholder, then you need to agree with other shareholders on how you will run the business beforehand.
Among the submitted documents are the articles of association or memorandum of association depending on the type of company. This document governs the directors’ rights and responsibilities, matters related to shares and their distributions, shareholders’ rights and responsibilities, etc. The UK allows the companies to use official standard templates (model articles). However, if you need to customize it, you should consult with an experienced agent.
- Hiring director(s) and company secretary
Another requirement is that your company should have director(s) and company secretary. The number of directors is defined by shareholders and is provided in the articles of association or memorandum of association.
- Submitting documents for registration
Once the company name is chosen, the articles of association is prepared and director(s) and secretary are appointed, you or your agent submit documents through the software or on paper. Alternatively, it is possible to send all documents online.
Finally, the Companies House registers the company or refuses to register on a specific ground.
How to get a company incorporation certificate in the UK?
When you submit your documents online for company incorporation, the company incorporation certificate is sent to you using the same method. However, you can order a certificate of incorporation with certified facts related to your company. This service is also provided by the Companies House which is subject to additional statutory fee.
The certificate of incorporation contains facts held in the official register, including company number, names of each director, name of secretary, registered office address. Upon request, the certificate can be accompanied with good standing wording meaning a confirmation that a company has been in continuous, unbroken existence since its incorporation.
What are company incorporation documents in the UK?
The incorporation documents are those you file to the Companies House in order to incorporate your company. It contains the minimum information required for processing registration and shows the company corporate details.
To set up a company in the UK you need to submit:
- application to register a company (form IN01);
- Articles of Association (or you should indicate that you use model articles);
- Memorandum of Association.
What is the checklist for company incorporation in the UK?
In order to prepare documents necessary for company incorporation in the UK, you need to prepare certain information. Please use the information below as a checklist:
- proposed company name which complies with the company name requirements;
- registered address in the UK;
- information of type of legal entity;
- details of company’s business activities by reference to a standard industrial classification code (SIC);
- details of the proposed director(s) and secretary;
- details of each beneficiary;
- statement of capital and initial shareholdings or a statement of guarantee;
- statement of compliance or guarantee.
What is Registrar of Companies UK?
The Registrar of Companies UK is the official authority that register companies and provide public data on companies in the UK.
The Registrar’s official name in UK is the Companies House and it contains details related to a company, including:
- basic company information (name, type);
- registered office address;
- business activities;
- company status;
- date of last accounts or confirmation statement filed;
- date of next accounts or confirmation statement due;
- full transaction filing;
- current and resigned directors and secretaries;
- insolvency information etc.
The access to the public data is free of charge and allows to access the last updated information on a company, so that you can check your business partners.
What is the cost of company formation in United Kingdom?
The cost of company incorporation in United Kingdom is Euro.
Tax System in United Kingdom
Companies registered in the UK are subject to corporation tax on their income and capital gains. Other taxes may include withholding tax, VAT, stamp duty and national insurance contributions.
What companies are qualified as tax residents in UK?
A company is resident in the UK if it is incorporated in the UK or if its central management and control are in the UK. In other words, it means that the central management is determined based on where the directors perform its duties. In certain cases, a company could be resident in another jurisdiction where a tax treaty applies.
What is a taxable period in UK?
A typical taxable period in UK is from 1 April to 31 March. However, each company may opt for another period.
When tax returns are filed in UK?
Companies submit tax returns in UK within 12 months of the year end.
What is corporation tax rate in UK?
A UK resident company is liable for corporation tax on its worldwide profits and chargeable gains. Currently corporation tax rate is 19%.
How are dividends taxed in UK?
There is no withholding tax on payments of dividends from a UK company. Generally, interest paid is subject to a withholding tax rate of 20%. A company may mitigate it in many cases of payment to a corporate entity, either by virtue of a double tax treaty with reduced rate, or the application of EU directives. It is necessary to apply for advance clearance to the UK tax authorities to make a payment of interest at the reduced withholding rate.
What is royalties tax rate in UK?
Royalty is subject to withholding tax at 20%, but it can be mitigated by virtue of a double tax treaty with reduced rate, or the application of EU directives.
What is VAT rate in UK?
The standard VAT rate within the whole territory of UK is 20%. It applies to most goods and services. Certain goods and services are exempt from VAT. Reduced rate of 5% applies to certain children car seats, home energy, etc. Zero rate applies to most food and children’s clothes. Postage stamps, financial and property transactions are exempt from VAT.
Company Liquidation in England (UK)
Similar to other parts of UK, a company liquidation in England can be done voluntary or involuntary.
What are the grounds for involuntary liquidation in UK?
A company incorporated in UK can be liquidated compulsory based on a court order. The court proceeding can be initiated by:
- Creditors if a company cannot pay its debts;
- Company itself;
- Company’s directors or members;
- Secretary of State for Business, Innovation and Skills;
- Financial Conduct Authority.
What is the procedure of involuntary liquidation in UK?
Upon the receipt of the court order, the petition must be advertised in the Gazette and a provisional liquidator is appointed. Within 28 days of the appointment, the liquidator is responsible for drafting the balance sheet, distribution of assets and settlement of credits. Finally, the company is removed from the Companies Register.
What are the grounds for voluntary liquidation in UK?
A company’s director, administrator or liquidator may propose voluntary liquidation which is to be approved by company’s members.
What is the procedure of voluntary liquidation in UK?
When the liquidator is appointed they take control of the company and will be responsible for settling any legal disputes or outstanding contracts, selling off the company’s assets and use any money to pay creditors, pay liquidation costs and the final VAT bill, etc. Finally, the liquidator gets the company removed from the Companies Register.
Note: If the Companies Register has reason to believe that a company is not carrying on business or is not in operation, its name may be struck off the register and dissolved without going through liquidation. However, this is not a best scenario for companies having assets.
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