HomeRulesBusiness and Finance Detailed Guidance for Setting Up in Business › Business In The UK As A Foreigner
Guide To Starting A Business In The UK As A Foreigner

The UK ranks high as one of the best places to be a proprietor, and foreigners recognize that. Starting a business in the UK as a foreigner naturally requires a lot of careful consideration, planning and adherence to the nation's rules according to The Hoxton Mix. This careful consideration, as you'll see, is especially necessary because of the variety in terms of the setting up process.

Understanding how setting up your operation looks like for foreigners, a clear definition of the organization is needed as well as its relationship to the UK’s laws. Fortunately, let’s check basic information and aid you in properly discerning and categorizing.

Preparatory Knowledge

Starting any operation in this nation for a native takes a lot of thought, and work is something that’s only heightened for the more than 36K foreign business owners (as of 2021). Below is a list of key things foreigners need to consider if they’re interested:

  • The business category and the visa types
  • The laws as it pertains to opening up a business as a foreigner

The operation category

Not every business type adheres to every UK law that we’ll discuss, which is why knowing the exact type of business you’re starting is so important. For the UK, the categories of operations include the following:

  • Sole traders: these own the entire operation, which means that they’re responsible for every business-related occurrence, including getting all the profits, and bearing the brunt for every loss
  • Partnerships: the only difference between these, and the previous entry is that all responsibilities are shared among multiple people, and in fact, both structures are known as unincorporated businesses in which the operation and the owners aren’t separate entities
  • Limited companies: known as incorporated structures, these separate their owners(partners/shareholders) from the operation and include both private limited companies and limited liability partnerships

Visa categories

All foreigners need visas of any sort to either visit or live in a land outside theirs. Variety also applies to those starting a business in the United Kingdom as a foreigner. The varieties you should be aware of and choose include the following:

Innovator Founder Visas

Taking the place of both innovative, and startup visas in April of last year, these allow foreign business owners to begin operations provided that their idea is unique, new, viable, scalable, and innovative.

Unlike their innovative predecessor, £50,000 investments are thrown out, while extensions to its up to 3-year UK staying time can be made, unlike its startup ancestor. Application fees are £1,190 for those applying from abroad, and £1,486 from within.

Global Talent Visas

Only industry leaders of spaces like digital tech, and the arts get these. Applications involve endorsements from an authority from the chosen field, or winning an eligible award. The UK stay time is up to 5 years and is extendable provided that you go to renew it.

Note that visas, while allowing you residence in the country, are not necessary. In fact, hiring people who can work for you in the UK is another use for innovator founder visas, provided that available positions don’t require a skill level below RQF level 3, UK A levels equivalent.

Rules of note

The above two considerations only work in light of the laws that exist around this venture. These laws include the following:

  • Registration with His Majesty’s Revenue and Customs(HMRC) for the above operation structures for taxing purposes
  • Inclusion of VAT for foreign organizations hiring native employees
  • Companies House registration for all operations unincorporated ones, as overseas companies
  • Choosing an appropriate name, especially for limited companies, which shouldn’t be similar to names on the UK’s register, while also containing the “Ltd” abbreviation, or the Welsh equivalent “Cyf”

In regards to taxation, corporation tax is for Companies House-registered operations, while those who aren’t registered with the entity only pay income tax on the domestic side, if the entity in question has branches outside. Also, while using UK-based bank accounts isn’t demanded, it’s useful for escaping the standard large transfer fees foreign accounts are charged.

Getting Started

Why is the above information necessary for this topic? Well, it shows you that starting a business in the UK as a foreigner isn’t a “one size fits all”, and that each business type has a unique path. Assuming that the business plan is already set, the following is the setting-up process for UK foreigners:

For unincorporated structures

These include the aforementioned partnerships and sole trader structures. The setup stages are as follows:

  • Seeking out the desired visa via application, which is hopefully accepted
  • Choosing the operations’ names and addresses according to UK Laws
  • Seeing what other rules and regulations surround your particular industry, and adhering to them
  • HMRC registration, which will include information such as the operation’s names, the HMRC’s self-assessment registration for both structures, nominated partner information for partnerships, and a national insurance number for sole traders who choose to live in the UK

For incorporated structures

These include the aforementioned LLPs and Private limited companies. The setup stages are as follows:

  • Applying for a desired visa, and being approved
  • Choosing the business name according to the rules
  • Checking on industry rules and regulations
  • Registering with both Companies House and the HMRC by providing information such as company name, and information regarding accounting, as well as, directors, and secretary roles, information regarding shareholders, and directors, and documents of formation

Final Thoughts

Business creation in this country is difficult enough, but it’s even more so for someone from abroad. The thoughts of visas, as well as taxation that come with starting a business in the UK as a foreigner only compound things, so being meticulous is always a plus. Once you’re fully aware of the exact state of your operation, the process becomes much more streamlined.

It’s also worth remembering that EU citizens should also be concerned with these rules in light of Brexit. As such, they too must go through all the steps above, while sticking to the rules just like everyone else.

Guide To Starting A Business In The UK As A Foreigner