COUNTRY GUIDE: DOING BUSINESS IN THE UK
Ranked 7th in the world for easiness of doing business, the United Kingdom (UK) is a welcoming place for startups and companies from all around the world. Whether you choose London, whose population reaches 8.8 million people, or cities such as Manchester, Birmingham, Bristol or Leeds, it will be a great destination to expand your business or to simply start a new one.
With a population of more than 65 million people, the UK is the 5th largest economy in the world (2nd in Europe), with more foreign investments than any other European country. The economy is the ranked 7th in the world for easiness of doing business, according to the World Bank. Even with a slower economic growth in 2017, the Gross Domestic Product (GDP) totaled £ 2,627,140 million last year.
A Pool of Talent
Considered as the best economy in Europe for growing business, retaining and attracting talent, the UK has some specificities for labor rules and costs. For example, employees take 4 weeks (or 22 days) of paid vacations per year. The average working time per week is 40 hours. In addiction, there are 8 bank holidays per year.
Companies usually use hiring agencies to find potential candidates. You can always do it on your own, but it’s usually the way to go. National Insurance must be paid to all employees.
The UK has an innovative workforce, ranked second in the G20 Global Innovation Index. With four of the world’s top ten universities, they have the largest proportion of people educated to degree level or equivalent in western Europe.
In terms of compensation, there is a National Minimum Wage and a National Living Wage, which applies to those aged 25 and over. They depend on the employees age and on the time of employment (the following link helps you to calculate it: https://www.gov.uk/minimum-wage-calculator-employers).
Setting Up a Business in the UK
In order to set up your business, having an organized schedule, with time for unforeseen events, and meeting local people will be crucial for the success of your idea.
Registering a Company
A private limited company (the most popular option) can be set up on-line, in up to 24 hours. However, to register a branch of your existing company, it may take up to 4 weeks. Another option is to incorporate a business as a individual trader (in which you have all responsibility for the company debts) or as a partnership (the liability is shared with other partners in the business).
Opening a branch does not offer the limited liability benefits that comes from setting up a UK limited company. Because the company must submit documents and information to the “Companies House”, what can take up to 4 weeks to be reviewed, it probably will demand more time to register a branch of an overseas company in the country.
Before starting the incorporation process, don’t forget that you’ll need:
• a name for the company
• an address for the company (in the UK)
• at least one director (not necessarily a British resident)
• at least one shareholder (an individual or a company)
• a document called ‘Memorandum and Articles of Association’, which must be in place at the time of incorporation.
Opening a Bank Account
Each bank has a different process for opening a bank account, but, in most cases, they will ask for a business address in the UK and a company representative residing in the country (usually a director or an employee).
It can take from 3 weeks to 3 months for a bank account application to be approved and for meetings to be arranged. Keep in mind that you should always contact the central inward investment banking team, usually located in London, and not apply through a local branch, online or with a call center, no matter where you intend to locate your business.
After complying with the first requirements, most of the remaining application process can be concluded online or over the phone. The bank will probably arrange a meeting with at least one representative of your company, face to face, to sign a bank mandate opening the business bank account.
How much will it cost?
Any company with a UK branch or office must pay a UK Corporation Tax on company profits. The current rate is 19% and it should be reduced to 17% by 2020.
The UK has the lowest corporation tax in the G20 and lower labor costs than businesses in Germany, France and Italy. Besides that, it is possible to obtain a 230% tax relief on research and development costs.
The UK has a straightforward planning process and one of Europe’s most efficient procedures for obtaining construction permits. Local planning authorities approve almost 90% of planning applications and 75% are completed within 3 months.
Small companies and entrepreneurs often opt for co-working or business offices. The main advantage is the flexibility offered in terms of infrastructure and rental agreement lengths.
4 Good Reasons to go to the UK
Whether you are a big company wishing to expand you business or a startup, you already have a lot of information to take a decision. However, if you need some more reasons to make up your mind, we list four of them:
1. Leading Economic Position: 1st world financial center, 2nd economy of the Euro Zone, 5th world economy, 1st destination of FDI in Europe and French investments abroad, Europe’s second simplest economy after Denmark to do business in.
2. Taxes: corporate tax of 19% since 2017 (17% by 2020), employer’s social contributions at 13.8% and employee’s at 12%.
3. Dynamic labor market: a flexible labor market: n°10/100, 31.84 million workers, including 3.48 million foreigners (Dec. 2016), very competitive labor cost, unemployment rate of 4.5% (March 2017).
4. Ease of doing business: Execution of contracts 15/18, Investor protection (8.3/10), Payment of taxes (30.9% of gross profit payable). Out of 190 economies, the United Kingdom is in 7th place.
Tips for Doing Business in the UK
• Punctuality in payments (salaries, suppliers or taxes) is essential to establish the credibility of the company
• Employees do not take long lunch breaks (30-45 min) and often have lunch in front of their computer
• 61% of professional conversations are about humor
Beeleevers in the UK
DIT is a British government organization that helps UK-based companies succeed in an increasingly global economy. Their range of expert services is tailored to the needs of individual businesses to maximize their international success.
They provide companies with knowledge, advice and practical support. Moreover, they offer expertise and contacts through a network of international specialists throughout the UK, British Embassies and diplomatic offices around the world. The British Embassy team in Paris, for example, may to help you in your expansion journey to the UK.
Contact Nadège Anturo, head of Inward Investment at the DIT, at Nadege.Anturo@fco.gov.uk or by phone at +33 (0)1 44 51 34 03.
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You can download the full Business Guide here.