Why set up your company in the UK
The UK continues to be the number one destination for attracting foreign direct investment in Europe, and third globally after the US and China. There are no currency or exchange controls or restrictions on foreign investment. The UK also offers a world-class skills base, Europe’s strongest research and development environment, a proven long-term return on investment for international businesses and an excellent quality of life.
The UK recognises the key role that intellectual property (IP) rights have in entrepreneurship and innovation and offers businesses a well-developed regime for the protection and monetisation of IP rights, as well as incentivising their development.
The UK ranked second globally, behind only the US, in the 2021 US Chamber of Commerce Global Intellectual Property Index. The index considers factors that ensure businesses can obtain, exploit and enforce IP rights and the UK is praised for its sophisticated IP environment and effective enforcement.
IP rights fall principally into four main areas – copyright, trademarks, design rights and patents. They are at the heart of every business and are often its most valuable assets, particularly in an increasingly digital economy, because they protect intangible property such as brands, inventions and creative works.
Some industries in the UK are heavily regulated including, notably, the financial services sector. When establishing a business in the UK, it is essential to ensure that the company has obtained all requisite licences to trade.
When a company decides to set up operations in the UK, it will need premises in which to do business. The UK has a number of different options, depending on the business’s needs and its flexibility in respect of location and costs.
Sovereign can help you navigate through all of this. For more information on how we can help you set up your business in the UK please read on. If you would like to know more about the private client services we offer, including assistance in property purchases, setting up of trusts and moving to the UK please click here.
Setting up the right company in the UK
Incorporation provides many advantages for a business and its owners: protection from personal liability for business debts, improved access to financing for business activities, simple transfer of business ownership through the disposal of shares and increased potential for tax planning through access to corporation tax rates and international tax treaties.
Whilst the generic term ‘UK company’ is commonly used, for international clients the majority of such entities are incorporated in the combined jurisdiction of England and Wales. All references to UK companies refer to such entities. Companies in Scotland and Northern Ireland are subject to separate legal systems; details of incorporation in both are available on request.
A company can be incorporated in the UK with same-day formation. A company is tax resident in the UK if its business is managed and controlled in the UK. However, its operations are not subject to any geographical limitation, rather a UK company is free to trade and engage with third parties worldwide.
There is no restriction on the nationality or country of residence of the ultimate beneficial owner(s) of a UK company and corporate ownership is permitted. Private UK registered companies must have at least one company director (public companies require two). The 2006 Companies Act stipulates that at least one of the company directors must be a natural person, i.e. an individual.
Sovereign’s corporate services team offers company formation not just in the UK but on a global basis. While it may be relatively straightforward to set up or purchase a company, proper groundwork and execution are essential if you are to gain and sustain a competitive advantage and successfully manage growth. It is essential to receive advice on:
- The type of company best suited to your commercial purpose.
- Arranging the ownership of that company.
- Administering the company correctly.
- Managing its commercial arrangements.
Every case is different, and a high level of expertise is required to ensure that any advice is up-to-date, effective and fully compliant. Failure to structure and manage a company correctly could mean that intended objectives and benefits are not realised or could lead to unintended consequences and liabilities.
With over three decades of experience handling cross-border corporate and commercial matters, Sovereign’s corporate services include forming new corporate structures, reorganising existing structures and repatriating earnings. We also offer the necessary expertise in administering and managing companies, including company law, board procedures, director responsibilities and shareholder relations, and financial and corporate compliance requirements.
We further provide the administrative support to maximise opportunities and achieve long-term sustainability, from full back-office solutions to assistance with tax and regulatory compliance. This includes accountancy, human resources, pensions, insurance, trademark and intellectual property protection, obtaining local licences and permits, executive relocation and specialist tax advice.
A good reason to relocate to the UK is to take advantage of the UK company as a highly tax efficient investment holding structure for the receipt of foreign dividends. When setting up a UK holding company, Sovereign will consider individual client requirements and circumstances before proposing a solution, but the following considerations will generally apply.
The distribution exemption applies to dividends received by a UK holding company from a qualifying overseas company.
If an overseas company is carrying on business in the UK via the establishment of a fixed or permanent base – ‘permanent establishment’ (PE) – but does not wish to set up a separate legal entity, it is required to register the UK establishment (branch) with the UK’s registrar of companies (Companies House).
Legally, a UK branch is considered the same entity as the parent company. It does not therefore have an independent legal personality and all profits and losses of the UK branch are incorporated with those of the overseas parent.
Limited Liability Partnership (LLP)
A Limited Liability Partnership (LLP) is a legal entity that combines the organisational flexibility and tax status of a partnership, while also providing limited liability for its members. This limited liability is possible because an LLP has a legal ‘personality’ that is separate from its members. Each partner’s liability is, in general, limited to his or her agreed contribution to the partnership.
LLPs are ‘tax transparent’, which means that each member – rather than the partnership itself – is assessed to tax on their share of the LLP’s income or gains. Any non-UK source profits or gains made by an LLP will not be subject to UK tax, except in so far as its members are UK resident individuals or companies.
Why incorporate with Sovereign?
Post Brexit Re-structuring
The UK introduced a new immigration regime following its departure from the EU, with a points-based system that subjects both EU and non-EU citizens to the same regulations. As of 1 January 2021, this amended most of the previous immigration routes into the UK, such as the Tier 1, Tier 2, Student and New Entrant route. Applicants now require at least 70 points to be eligible for a visa.
The previous Tier 1 (Exceptional Talent) route is replaced by a new fast-track ‘Global Talent’ visa, which enables recognised global leaders and promising individuals in science, humanities, engineering, the arts and digital technology to come to the UK without a specific job offer, if endorsed by a recognised UK body.
The Start-up and Innovator routes are designed to attract entrepreneurial talent and innovative, scalable business ideas to the UK. Start-up is for those setting up an innovative business for the first time, and Innovator is for those with industry experience and at least £50,000 funding. Applicants can either be individuals or teams.
The previous Tier 2 route is replaced by a ‘Skilled Worker’ category, which applies to a larger pool of jobs because it opens up eligibility from the Regulated Qualifications Framework (RQF) Level 6 (Degree level) and above, to RQF Level 3 (A-Level) jobs. There is no cap on the number of people who can come to the UK and the resident labour market test has been abolished.
Points are assigned according specific skills, qualifications, salaries and shortage occupations, and applicants are required to score a total of 70 points. Basic requirements include proficiency in English (10 points), a confirmed job offer at the requisite skill level (20 points) from a Home Office-licensed sponsor (20 points).
To make up the remaining points to reach the 70 required, an additional 20 points can be obtained via a ‘tradeable’ process, largely dependent on the salary rate offered but also encompassing roles that are recognised as being a shortage occupation or those jobs requiring a relevant PhD-level qualification. There are also specific salary requirements for certain occupation sectors.
There is no general route for employers to recruit from outside the UK for jobs offering a salary below the general salary threshold or for jobs at a skill level below RQF3. The six-year maximum period of stay and cooling-off period under the Tier 2 visa have also been removed. It will be possible to switch into the Skilled Worker route from most other visa categories without having to leave the UK.
Businesses wishing to sponsor migrant workers must be licensed. UK Visas & Immigration (UKVI) is currently processing new licence applications within about eight weeks. It has also introduced a new priority processing service under which businesses can pay an additional fee of £500 to reduce the waiting time to five working days.
A visa request will be denied if an applicant has been convicted of any criminal offence, in the UK or abroad, for which the sentence is one year or more of imprisonment.
The Representative of an Overseas Business category – often referred to as a ‘Sole Representative Visa’ – allows a business that has no branch or subsidiary in the UK to send a senior employee to the UK to establish a branch or subsidiary. To be eligible for this visa, an applicant must have sufficient money for support without help from public funds and meet the English language requirement.
An applicant as a sole representative must:
- Be recruited and employed outside the UK by an active and trading business (whose headquarters and principal place of business are, and will remain, outside the UK).
- Have the skills, experience and knowledge to do the role.
- Hold a senior position within the business (but not own or control the majority of it) and have full authority to make decisions on its behalf.
- Intend to establish the overseas business’s first commercial presence in the UK, either as a registered branch or a wholly owned subsidiary.
An applicant may also be eligible if the business has a legal entity in the UK that does not employ staff or do any business. An applicant can also replace a previous sole representative if the employer has been working to establish a UK branch or subsidiary, but it is not yet set up.
A visa holder can bring dependant family members – husband, wife or partner, and dependent children under 18 – to the UK on this visa.
A Representative of an Overseas Business visa is issued for an initial period of three years and can be extended multiple times for periods of two years. A visa holder can apply for ILR status after he / she has been in the UK for five years, providing he / she has an ongoing job with the same company.
In his Spring 2021 Budget statement, UK Chancellor Rishi Sunak announced that the government is modernising the immigration system to help the UK attract and retain the most highly skilled, globally mobile talent – particularly in academia, science, research and technology. To achieve this, the government will:
- Introduce, by March 2022, an elite points-based visa. This is to include a further new ‘Scale-Up’ category of visa that will be for migrants “with a high skilled job offer from a qualifying scale-up at the required salary level” via a fast-track verification process. A ‘Scale-Up business’ must be able to “demonstrate an annual average revenue or employment growth rate over a three-year period greater than 20%, and a minimum of 10 employees at the start of the three-year period”. This route will allow eligible individuals to work, switch jobs or employers. Individuals will be able to extend their visa and settle in the UK, subject to meeting specific requirements.
- Reform the ‘Global Talent’ visa to provide a new immigration route to the UK for ‘High Potential’ individuals. This commits to provide access to the UK for graduates of top global universities with no job offer and no minimum salary requirements. This route will allow eligible individuals to extend their visa and settle in the UK if specific requirements are met.
- “Revitalise” the ‘Innovator’ visa route. Proposals include: simplifying and streamlining the business eligibility criteria by limiting the requirement to demonstrate high business growth potential to the UK market rather that at an international level; providing fast-tracking for applications; and removing the £50,000 investment fund requirement and enabling endorsing bodies to confirm that the applicant has access to ‘sufficient’ funds for their business needs.
- Launch a new ‘Global Business Mobility’ visa (in place of the Representative of an Overseas Business category) that would “allow overseas businesses and innovative companies greater flexibility in transferring workers to the UK, in order to establish and expand their businesses”.
- Provide practical support to small firms that are using the visa system for the first time.
- Modernise the immigration sponsorship system to make it easier to use. The government will publish a delivery roadmap in due course.
- Establish a global outreach strategy by expanding the ‘Global Entrepreneur Programme’, marketing the UK’s visa offering and explore building an overseas talent network.
We await full details of the schemes. The UK government aims to implement and launch a number of the new schemes from March 2022.
Corporate Insurance Services
Corporate insurance enables business owners to manage their corporate risk. Understanding all known and anticipated risks allows a business to measure and prioritise, as well as take the appropriate actions to reduce the potential for losses.
An effective risk management plan can save resources and improve operational stability, protect people and the environment, prevent or reduce liabilities, and protect reputation and public image. It can also assist in clearly defining your insurance needs.
Sovereign Insurance Services (SIS) provides the insurance component of the Sovereign’s product suite with a range of traditional and non-traditional corporate insurance solutions that are aligned to a company’s overall risk management strategies. Based in Gibraltar but with a presence in London – the centre of the international insurance industry – SIS will work for the Sovereign client, not the insurer, to obtain the most suitable insurance products at the most competitive pricing levels available in the markets. It will also ensure that you are not paying for insurance that you don’t need.
Our range of corporate insurance products includes, but is not limited to:
- Business Insurances for corporate clients including liability programmes covering public liability, professional Indemnity and insurance for directors and officers;
- Cyber liability insurance;
- Key Man Insurance (to compensate a business for the financial loss on the death or critical illness of a key employee);
- Personal Accident/Illness and Income Protection/Disability Insurance;
- Bespoke personal insurance programmes;
- Kidnap & Ransom insurance.
Private Medical Insurance can benefit businesses in many ways. Employees are an expensive investment, so you need to make sure that they stay healthy. Getting the right medical help quickly can be difficult – especially when employees are working and living overseas.
PMI is also a high value employee benefit to aid recruitment and staff retention. Prompt attention, quality treatment and a speedy return to work make medical insurance a highly valued benefit for employee and employer alike.
With our PMI plans, whether it’s an illness or an accident, you can provide your employees with access to medical treatment and care – wherever and whenever they need it. PMI ensures that your employees have speedy access to healthcare, greater control over when and where treatment is received.
PMI costs can be high, so it is important that you make the right choice on what cover levels would suit your employees. SIS will research the market thoroughly and arrange PMI plans for corporate clients that are appropriate to their size, budget and location, as well as for private individuals and their families.