Opening A Business In The UK From India

Opening A Business In The UK From India

The United Kingdom is a place of enormous business opportunity. Despite the country exiting the European Union after Brexit, it still is one of the world’s largest and most developed consumer markets. 

In the Ease of Doing Business index, the UK features among the top 10 nations to easily start a new business. Many investors have cited several reasons like the size of the market, location, language, government policy, and low corporation tax as the reasons for choosing to do business in the UK.

The country is the favoured destination for Indian businesses as well. Many Indian businesses have their offshore entities in the UK. Indian residents can also open a UK business without having a business in India.

The UK has ensured that it remains attractive to international businesses, including start-ups. If you are an Indian resident, you too are free to open and operate a company in the UK. 

Here are the most important things you need to know for starting a business in the UK.

Choosing a Company Structure

The first step to formalize a business anywhere globally is to form a company for the business. To register a company, you ideally require at least one director and one shareholder. They could both be the same. It is recommended to have a company secretary as well. 

The minimum share capital of any company incorporated in the UK is GBP 2. However, it is recommended that your corporate bank account has at least a balance of GBP 100. 

A company can have one of the several available structures: 

Private Limited Company (Ltd.): This is the most popular format among foreign investors as it requires only one shareholder. Suppose you have your business headquartered somewhere in the world and want to expand operations to the UK. In that case, you can incorporate your wholly-owned subsidiary with only one shareholder – which could be an individual or a company. There is no minimum capital requirement. 

Public Limited Company (Plc.): The requirements for a Public Limited Company are slightly more stringent. The minimum share capital needs to be GBP 50K, and at least 25% of the share capital has to be paid up. A PLC requires at least two directors and a company secretary. The financial statements of the company will be audited if your turnover exceeds GBP 1M. 

Branch of a Foreign Company: This means that the parent company is based overseas and is responsible for all the branch’s liabilities opened in the UK. This specific branch will have to be registered with the Companies House.

Limited Liability Partnership (LLP): An LLP requires at least two members for formation. Each member’s liability is limited to their shareholding proportion. Such kinds of companies are increasingly used for joint ventures. The process of registration and disclosure requirements are similar to a limited company. 

Incorporating Your Business

Once you have finalized your business, the kind of company you wish to open, and have your finances in order, you will have to fill and file form OS IN01 to incorporate your company. The form will include:

  • The name of your company

  • The country you are registering your company

  • Any provision for limited liability

  • Whether the company will be public or private

  • A statement of share capital, if applicable

  • A statement of proposed officers, if applicable

  • and your intended registered address

The form will then have to be sent to the Companies House within a month of opening for business. You will also need to send a registration fee of GBP 20 will with the form. This can be a cheque or a postal order.

Registering For Taxation

All businesses in the UK, along with the entrepreneurs running it, must register with the HMRC for tax purposes. They are responsible for submitting their tax returns.

Limited companies incorporated in the UK along with any foreign company (meaning you as an Indian resident setting up a company in the UK) are required to register for Corporation Tax. The rate for Corporation Tax is 20% on profits, minus any allowances and relief.

All companies incorporated in the UK are automatically assigned a Unique Taxpayer Reference or UTR. This number is a unique 10-digit number that is used to pay Corporation Tax. 

To register for Corporation Tax, you have to first sign in to your business tax account using the Government Gateway user ID and password issued to your company. If you do not have a user ID, you can register for one. 

This 10-digit number is mailed to your company address by the HMRC within two weeks of registration. While registering for the UTR, you will have to inform the HMRC of:

  • Your company’s registration number

  • The date you began the business. This is essential as your first accounting period will start from this date and

  • The date your annual accounts are made up to.

Once that’s done, the HMRC tells you the deadline for payment of the tax. It is essential to file a Company Tax Return, even if your company is loss-making or has no revenue.

You will also have to register your business for Value Added Tax (VAT) if it has an annual turnover of GBP 85K. You will require the following information to register for VAT:

  • Your UTR

  • Certificate of Incorporation

  • Details of all associated businesses within the last two years

  • Details of your business bank account

You can also register for VAT online on the HMRC website.

Visa Requirements

You DO NOT need a visa to run a business in the UK as a foreigner. If you do not intend to work in the UK and don’t need to visit the country for business operations, there is no need for a UK visa. 

However, if you wish to relocate to the UK after starting your business, you will need a visa. You may apply under an Innovator visa or a Start-up visa category. The requirements for these are quite strict and detailed below. 

Innovator Visa

As the name suggests, such visas are for individuals seeking to start an innovative business in the UK. You can apply for it if your business is different from anything else in the market and if an approved body has endorsed your business or business idea. 

The eligibility criteria for the Innovator visa are very strict. These includes:

  • access to investment funds worth at least GBP 50K and proof of the source of funding. 

  • A bank balance of GBP 1,270  or more for 28 successive days

  • can speak, read and write English to level B2 on the Common European Framework of Reference for Languages (CEFR) scale.

There is a fee of GBP 1,021 for the visa. You also have to pay a healthcare surcharge, which varies on whether you are applying for the visa alone or along with dependants. 

Under the Innovator Visa, you can set up one or several businesses, bring your partner and children with you as dependents if they are eligible, and apply to settle permanently in the UK if you live for over three years and meet other criteria.

Start-up Visa

Similar to the Innovator Visa, this one also requires an innovative business idea that is different from anything else prevalent in the market. 

This visa does not require you to have access to any form of funding, but it does require you to have GBP 1,270 in your bank account for at least 28 consecutive days before applying. Along with this, you need to be endorsed by an authorised body that is either a higher education institution in the UK or a business organization that supports UK entrepreneurs.

Unlike the Innovator Visa, you cannot extend this visa, and it is valid only for two years. You may switch to an Innovator visa on the completion of two years. The requirement for the English language is similar to the Innovator Visa.

The application fee for a Start-up visa is GBP 363.

Opening A Bank Account

The UK has many banks that offer business accounts to international businesses and entrepreneurs. The rise of the fintech industry has also made access to banking easier. 

Fintech firms may not provide traditional banking facilities, but they enable international businesses to fulfill compliance requirements with the HMRC and pay and receive funds. Banks in the UK are bound by law to carry out Anti-Money Laundering (AML) and Know Your Customer (KYC) checks before offering a business bank account.

Although every bank will have a slightly different process to open a business account, for most cases, you will have to furnish:

  • Your UK business address

  • A company representative living in the UK – usually a director or an employee, who will be an account signatory (not required with Winvesta)

  • A business plan showing why you need a UK business bank account and (not required with Winvesta)

  • A clear identification of all the parties who own more than 25% of the business.

  • Photo ID and Proof of Address for all controlling directors and any substantial shareholders

  • The bank will also require to meet at least one representative of your company face-to-face in the UK to sign a bank mandate to open the business bank account. (not needed with Winvesta)

Opening an account with a traditional bank can take four weeks to as many as three months. On the other hand, Winvesta can provide you business banking services in as little as a day. Winvesta is the only platform in the UK that can give you a business banking account without the requirement of having resident directors in the UK.

Winvesta vs UK Banks

With a Winvesta account, you can transact in over 35 global currencies, including the GBP, USD, and EUR, among many others. Winvesta is regulated by the UK’s Financial Conduct Authority (FCA). Your cash is safeguarded with large banks like Barclays. The accounts come with full transactional capabilities like local receipts and payments (Faster Payments, SEPA, ACH) and integrated FX conversions and remittances to India.

Ready to Open a UK Business?

Learn more about the Winvesta Business Account

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