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United Kingdom

The UK’s diverse economy is the ideal location for companies to realise their international business potential. UK is the seventh largest economy in the world, a leading global trading nation, as the second largest exporter and third largest importer of commercial services, and the tenth largest exporter and sixth largest importer of merchandise.

Advantages

  • Political and economic stability
  • Competitive tax environment
  • Stable regulatory regime
  • English Language
  • London is Europe’s No.1 city for business
  • EU Member

Limited Liability Partnership - LLP

  • Suitable for new and existing partnerships wishing to obtain limited liability status
  • Aimed particularly at professional partnerships such as accountancy and solicitors firms
  • Maintains tax status of a partnership
  • Members have limited liability
  • Suitable for most commercial business activities

Key Features

It is a body corporate, i.e. a separate legal entity distinct fr om its members. The LLP can own and hold property, employ people and enter into contractual obligations. Debts incurred are the debts of the LLP.

An LLP has unlimited capacity which means that third parties need not be concerned about any restrictions on its activities.

An LLP has members but no directors or shareholders. An LLP has no share capital and is not subject to the company law rules governing the maintenance of capital.

An LLP has complete flexibility as to the internal structure that it wishes to adopt: there are no requirements for board or general meetings or decision making by resolution. An LLP does not have a memorandum or articles of association.

As the members have limited liability, the protection of those dealing with an LLP requires that the LLP maintain accounting records, prepares and delivers annual accounts to the registrar of companies, and submits an annual return in a similar manner to companies.

Members and Designated Members

There are no shareholders in an LLP. Instead there are members and they are identified in the initial incorporation document with subsequent changes to the membership being notified within 14 days of the event occurring.

Membership of a Limited Liability Partnership

A limited liability partnership must have at least two members. If membership falls to only one member and the limited liability partnership continues to carry on business for more than 6 months, then the benefits of limited liability are lost.

After incorporation, you must tell Companies House about:

  • The appointment of a new member or designated member
  • The member or designated member ceasing to act in the limited liability partnership
  • Changes in a member's or designated member's name or address or any of the other details originally registered
  • Changes in a member's status (member to designated member or vice versa

Private Limited Company - LTD

A limited company is a separate legal entity created by incorporation by The Registrar of Companies and once incorporated a certificate is issued with the company registration number.

A registered company is a corporation i.e. it is a separate legal person distinct from shareholders. A Limited Company separates business risk from the shareholders personal assets whereas partners and sole traders remain liable personally for all business debts.

Direct Taxation of UK companies

UK companies are tax-resident in the UK for Corporation Tax.

If their activity is outside the UK, then they can apply to be tax resident in another country, and therefore not be subject to UK Corporation Tax.

There are three easy rules:

  • If no tax is paid in other countries, then the company is UK tax residence by default
  • If there is a tax treaty between the country of trading and the UK, then the terms of the tax treaty apply
  • If there is no tax treaty, the UK will give double tax relief unilaterally

UK corporation tax for small companies is expected to be 21% in the medium term.

The VAT situation of UK companies

A UK company is not formed with a UK VAT number, but needs to apply for a UK VAT number if it has substantial activity in the UK. If the company has substantial activity outside the UK, but in another European jurisdiction, the company may need to apply in that jurisdiction for a VAT number there.

Public Limited Companies - PLC

As with standard Limited companies, PLCs are created in a format suitable for general operation. A PLC must have a capital of £50,000.

At least 25% (£12,500) of this minimum must be fully paid up before the Registrar of Companies can issue a Certificate for Commencement of Trading. This Certificate must be issued before the company commences any business transactions.

Key Features

  • Necessary if the company is to trade its shares to the public
  • Undertakes any nature of business
  • Operates anywhere in the world
  • Members have limited liability
  • Own choice of name
  • Must have at least two directors and two shareholders
  • A private company can be converted to a PLC
  • Provides access to capital growth
  • Creates a market for the company’s shares
  • Incentivises and reward employee commitment – by the use of share option schemes
  • Increases the company’s ability to make acquisitions – its shares can be used as currency
  • Creates a heightened public profile
  • Enhances status with customers and suppliers
  • Allows the company to use its shares as an acquisition currency

The primary difference between Public Limited Company (PLC) and a Private Limited Company (LTD) is the Public Company's shares may be offered for sale to the general public.

Requirements

  • Company shareholders and directors need not be from the UK
  • There must be 2 directors
  • There is no maximum number of directors
  • Directors can be corporate bodies or private individuals
  • A director can be of any nationality
  • All companies must appoint a company secretary
  • Share Capital of £50,000 of which 25% must be paid up
  • The company is required to have a Registered Office in the UK