COMPANY FORMATION IN UK
The United Kingdom is one of the world’s great trading powers and financial centers, and its economy ranks among the second largest in Western Europe (behind Germany). The UK is no tax haven, but it does have relatively low tax rates compared with other European countries. Generally speaking, when part of an international trading group and if properly structured, UK tax can be minimized or entirely eliminated for a UK company.
UK COMPANY KEY FEATURES
UK LTD. - limited liability company:
- At least 1 Director must be a private person.
- Minimum share capital is £2.
- Directors and Shareholders are featured on public records. But nominee are customary.
- VAT number (optional): You will be required to have a UK office and UK bank account for VAT registration purposes.
- Financial statements is to be submitted for each fiscal year.
- Company formation packages available
UK LLPs have the following characteristics:
- Minimum two partners (our package includes 2 offshore corporate partners)
- LLPs do not have share capital, rather “capital” that is contributed by the partners
- No UK corporate tax if profits are passed to the offshore partnersTrading accounts and a tax return must still be filed annually (even if no corporate tax is paid).
- VAT: not recommended if you operate solely outside of the UK.
- A UK LLP that does not pay UK corporate tax is not tax resident. Please contact us if you would like to structure a tax resident LLP.
- Company formation packages available. Contact us!
POPULAR UK COMPANY APPLICATIONS
Most popularly use are UK Limited companies (LTD).
The Limited Liability Partnership (UK LLP) has been available in the UK since April 2001, pursuant to the LLP Act 2000. The LLP incorporates the tax transparency and flexibility of a partnership with the limited liability, as well as separate legal identity benefits of a company. UK corporate tax is avoided completely if there are non-resident partners and if the LLP trades solely outside the UK. The LLP Partnership Agreement is specially drafted to allocate 100% profits to the non-resident partner.
Both UK Ltd. And UK LLP are popularly used as:
- Agency companies that conduct international trade as agents for offshore and other non-UK principals, and receive only commission income. Agency companies in UK are often used in order to open a bank account at a UK bank for and offshore principal.
- Holding companies that can receive a dividend from a foreign subsidiary, as well as pay out a dividend to an offshore beneficiary without suffering any form of UK tax.
- Nominee companies serving as asset protection vehicles, i.e., holding property or other assets on behalf of a third party.
- Royalty routing companies, which may receive royalty payments related to a non-UK copyright without suffering UK withholding tax.
UK COMPANY TAXATION
- CORPORATE INCOME TAX (CIT): Standard CIT rate is 24%. Profits less tan £300,000 are taxed at rate 20%. For taxable base reduction Agency Structures are often used.
- INCOMING DIVIDENDS:0% to most dividends.
- CAPITAL GAINS TAX (CGT): Capital Gains are normally treated as regular profit. Participation Exemption applies if
- the selling company owns at lease 10% of the company-to-be-sold for a period of 12-24 months and
- the companies are trading.
- WITHHOLDING TAX:
- ROYALTIES: Standard rate is 20%, unless exempt under EU Directive on Interests and Royalties or reduced under a Tax Treaty.
DIVIDENDS: normally is 0%
INTERESTS: Standard rate is 20%, unless exempt under EU Directive on Interests and Royalties or reduced under a Tax Treaty.
- VAT. European Union VAT regime. The standard rate for inland sales is 20%.
How to register a company in UK?
- Choose a structure, what is appropriate for your business. Need help? Contact us.
- To find out more, please contact us.