The United Kingdom of Great Britain, or commonly known as the United Kingdom (UK), is one of the most prosperous and stable economies worldwide. With a high per capita income, world-leading education system, flexible trading environment, competitive tax rate, generous public services, and robust legal framework, there are plenty of opportunities for entrepreneurs and corporations to prosper in the UK.
Why Start a Business in the UK
The country has a long and rich history as a hub of international trade and foreign investment in Europe. Despite the economic and constitutional changes in the past few years, the UK continues to be one of the best places to do business according to the World Bank due to its close links to many other markets, time zone, and as English remains the most popular language for international business.
While the impact of the decision to leave the European Union (EU) on foreign investment is still making itself known, the UK Government has repeatedly reaffirmed that the country will remain very much “open for business.”
Legal System in the UK
The UK comprises of four countries with three separate legal jurisdictions: England and Wales, Northern Ireland, and Scotland. Each jurisdiction has its own separate legal system. England and Wales and Northern Ireland use the common law.
Politically, the country is a Parliamentary-Monarchy, with a strong system of parliamentary democracy and the royal family taking a symbolic role. The current head of state is her majesty the Queen Elizabeth II.
While, Scottish law is based on a mixture of uncodified civil law and common law based on its court system. It is important to note that there is a significant overlap between the three jurisdictions.
Public Holidays in the UK
The following are the public holidays in the UK:
- New Year’s Day
- Good Friday
- Easter Monday
- Early May bank holiday
- Spring bank holiday
- Platinum Jubilee bank holiday
- Summer bank holiday
- Boxing Day
- Christmas Day
*Note: Other various public holidays are country, state, and territory-specific.
Business Entities in the UK
Business structures in the UK are divided into four main types. Each has its own tax and liability implications for owners and shareholders. A person can conduct business as a sole trader, partnership, limited liability partnership (LLP), or a limited company, which can be established either as a private or public company.
A private company is the most common form of corporate entity used by foreigners in the UK. The processes required to register and incorporate a private company in the UK are considered to be relatively straightforward. Applicants simply need to complete certain prescribed documents at the UK corporate registry Companies House, together with payment of a fee.
Taxation in the UK
Navigating the complications of a new country’s tax system can easily be one of the most difficult factors when it comes to global expansion. Income tax in the UK is paid on a PAYE (Pay As You Earn) system, with companies typically making payments on behalf of employees. Currently, the corporate tax rate is fixed at 19%.
Furthermore, the double taxation agreements through treaties the UK has with other countries means that most UK-based companies will not pay or will pay reduced foreign tax rates on foreign dividends. There is also a Value Added Tax (VAT) payable on most goods and services supplied in the UK, which is 20%. VAT is an additional benefit to companies operating in the region.
As these systems may be considered slightly more complex than in other countries, this is where companies may consider partnering with a payroll outsourcing services provider.
Full-time employees are expected to work no more than 48-hours per week – normally averaged over 17 weeks. However, young people between school leaving age and 18 years old should only work a maximum of 40 hours a week. This law is called the Working Time Regulation.
Employees can opt-out of this limit by giving written notice to their employer; however, employers cannot force employees to work beyond the prescribed hours.
Vacation Leave in the UK
All full-time employees are legally entitled to 5.6 weeks’ or 28 days paid holiday leave, or what is known as statutory leave or annual leave. An employer can add bank holidays as part of the annual leave. At the same time, an employer can offer more than the minimum required annual leaves.
Sick Leave in the UK
Employees can take time off work if they are sick. If an employee has been off for more than seven days, they must show a doctor’s sick note as proof to their employer. Non-working days such as weekends and bank holidays are part of the 7-day count.
Employees who apply for sick leave are entitled to Statutory Sick Pay (SSP) of £95.85 per week.
Health Insurance in the UK
In the UK, the healthcare system comprises both public (government) and private healthcare.
The National Health Service (NHS) provides healthcare for people who live in the UK. NHS is residence-based rather than insurance-based, meaning that all UK residents, including expats, can access many NHS services free of charge.
Treatment with the NHS is generally free for UK residents and non-UK residents at the point of delivery. However, while the standard of medical facilities is good, the waiting lists can be extensive. Moreover, the choices of general practitioners may be limited.
People in the UK who are able to afford it, may supplement their public healthcare with a private one. The breadth of coverage one can get from private medical insurance depends on the policy purchased.
The primary benefits of private medical insurance are that you avoid long waiting lists for NHS treatment, you have access to a wider range of healthcare facilities, and you are covered for specialist surgery and treatments.
INS Global in the UK
INS Global is an experienced world-leading global PEO and can help your company expand to the UK. Our team of certified experts will be your guide in setting up business operations in no time.
Our expertise in local processes and regulations will free you from administrative and technical burden so that you can focus on growing your business in the UK. Contact us and let’s make your global expansion happen today.