England is one of the most attractive jurisdictions for registering a foreign company there. Forming a company there will automatically render it highly reputable and the process of company registration is not so long and difficult notwithstanding the conservative corporate culture in England.
What is so attractive about England for international entrepreneurs?
Below please find an incomplete list of compelling reasons to register a company in England:
- Clear and transparent corporate legislation;
- Favorable business conditions (8th position in 2020);
- Simple and fast company registration;
- Tax management opportunities;
- No bureaucracy nor corruption;
- Reputability and prestige of the jurisdiction, which contributes to the success of international business operations;
- Direct access to the banking services of the highest quality: loans, transfers, deposits, accounts, bank guarantees, and so on.
By registering a foreign company in England, you gain access to all world markets, enhance your business opportunities and greatly improve your company status.
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information from an expert on taxes
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oinformation from an expert on taxes and possible tax benefits of the jurisdiction appropriate to the company's structure.
The most popular forms of company ownership in England
The statistics published on July 25, 2020 shows that the following types of company ownership are most popular in England today:
- Private limited companies – 4,183,970 (92.8%);
- Limited partnerships – 53,273 (1.2%);
- Limited liability partnerships – 51,154 (1.1%).
Over 95% of all business activities performed in England are performed by the companies with these forms of ownership. The local company register, however, allowed registering companies of 28 different types.
Public Limited Companies (PLCs)
If you would like to set up a PLC in England, you have to bear in mind that there are two types of PLCs:
Companies Limited by shares
The main purpose of such companies is making profits. They are established by a group of people emitting shares that are distributed only to a limited number of people. The liabilities of the company are not the liabilities of its founders. Each shareholder is liable for company debts only by the share of ownership that he/ she has.
Companies Limited by guarantee
Making profits is not the goal for such companies. Rather, they are created for some special purposes. They are established by guarantors who contribute to the charter capital. All the profits generated by such a corporate entity is reinvested or it goes towards the defined goal. The profit is not distributed among the company owners. Charitable organizations, community projects, sports clubs, various societies usually have the form of companies limited by guarantee in England.
Limited Partnerships (LP)
An LP registered in England shall have at least one general partner and at least one limited partner. The general partner and the limited partner have different liabilities. The former has unlimited liability for the company debts and other obligations. The latter has limited liability that does not exceed the amount of the contribution that he/ she has made to the LP charter capital.
Limited Liability Partnerships (LLP)
As the name suggests, the Partners in this sort of partnership have limited liabilities only. The corporate tax is not levied on the company while the profits are distributed to the partners and they are taxed as private individuals. Two or more people of corporate entities can form an LLP in England.
Other forms of company ownership in England
In addition to the company ownership types described above, the following methods of incorporating a company in England are available:
Sole trader/ self-employed individual
A sole trader is a private entrepreneur engaged in economic activities in his or her own. A sole trader has unlimited liability. The English legislation requires that a private entrepreneur should register as a sole trader with the authorities if his/ her income exceeds 1,000 pounds per year.
It is a partnership of several people or organizations where all rights, obligations, liabilities, and profits are equally divided among the partners.
It is a company established for charitable, socially significant, or communal purposes.
This is a type of company that a non-resident of England (including residents of other parts of Great Britain) can establish in the country.
This is an association of people that does not have making a profit as its goal. The founders of an unincorporated association take certain obligations that they shall personally meet. A local sports club will serve as an example of such association.
How to register a limited liability company in England
Private limited companies (and what is called ‘public’ in England is called ‘private’ in all other parts of the world) are the most popular types of companies in England. This is why we will focus on the stages of establishing a PLC in the country.
Company name invention
When thinking of a name for your prospective company, you should take the following aspects into account:
- The name should not coincide or sound similar to names of other companies:
- The name must end in окончание Ltd or Limited;
- Signs and symbols are allowed in English company names;
- Abusive language is not allowed in the company name;
- The name should not suggest that the company is connected with the local authorities in any way.
The use of Ltd or Limited endings is not obligatory in England if the company is engaged in charitable activities or if the company By-laws explicitly prohibit payment of dividends to the company owners.
Director and secretary appointment
The company director is its chief executive officer in England. He or she is responsible for the effective management of the corporation and for informing the stockholders about all current issues. The number of company directors is not limited in England but there should be at least one company director who is older than 16. This person does not have to be a resident of England even though a registered legal address in the country is required.
The names of company directors are publically accessible through the Company Register. The Register also requires that the company should have a mailing address where official letters can be sent. A personal residential address can be used for this purpose but this is undesirable to use one for privacy protection reasons.
Private limited companies in England do not have to have secretaries. However, sometimes secretaries are hired to take over some of the director’s duties. Besides, one person can hold these two positions simultaneously.
Please note: Even if the company has a secretary, only the director is legally accountable for the company operations.
Capital stock formation
The PLC registered in England shall have at least one shareholder. There are no limitations on the maximum number of shareholders. A company shareholder may act as its director.
When registering a company in England, you have to supply the following information concerning the shareholders (and the charter capital):
- The number of shares issued, their types, and their total worth;
- Shareholders’ names and addresses.
In addition to that, you will need to specify how many share each shareholder has, what their type is, what the transfer rights are, how many votes each share is worth, and so on.
If you are a shareholder in an English-registered company, you are entitled to receive dividends on its commercial operations. Dividends in the amount of 2,000 pounds per year is tax-exempt.
Dividend tax rates in England:
- Base rate – 7.5%;
- Incremental rate – 32.5%;
- Add-on rate – 38.1%.
Company owner registration
Any company beneficiary whose share of ownership exceeds 25% or anyone who significantly affects the management process shall be registered with the PSC (Person with Significant Control) register within 14 days since the date of the company formation. Within 14 more days, the Public Register shall have this information too.
Corporate documents preparation
To register a company in England the following documents have to be prepared:
- Memorandum of Association signed by all company founders;
- Articles of Association as the document guiding all company activities and defining the management process and the obligations and rights of all company officers and owners.
If you choose to register a company in England via the Internet, you will find the standard Memorandum of Association at the official government website. It is printable is case you would like to file a paper-based application for company registration in England.
Mailing address registration
You cannot set up a company in England without registering a legal address there. The regulating authorities will be sending you various official letters and they need a functional mailing address where they can send them. You company address in England is going to be publicly accessible so we do not recommend that you use a residential address for this purpose. It would be a better idea to use the services of special agents in the country.
SIC code selection
You can find the full list of SIC (Standard Industrial Classification) codes at the Company Register website. Use the keywords to find out which codes you have to indicate depending on the types of business activities that your English company is going to be engaged in.
Ways to register a company in England
You can submit an application for registering a company in England in the following ways:
- By mail;
- Via an authorized agent;
- Via special online apps;
- Via the official government website.
If you are using the Company Register website to set up a company in England, you can register with the tax authorities of the country in one go.
The registration certificate will arrive within 24 hours since the moment when you submit all the documents and pay the state duty of 12 pounds.
Please note! If you are establishing a company of a type other than limited company, the application documents shall be sent by mail only.
If you would like to enquire about various details related to registering a company in England, please contact us without hesitation. You can use the email address found at the top of the page, the WhatsApp number, or the live chat. We always reply ASAP!
What is the dividend tax rate in England?
Dividends of up to 2,000 pounds per year are tax-free. Dividends of up to £50,000 per year are taxed at the base rate of 7.5%. Dividends of up to £150,000 per year are taxed at the incremental rate of 32.5%. Dividends above £150,000 per year are taxed at add-on rate of 38.1%.
Who can act as a company director in England?
There are nor requirements as to the qualifications of the company director. It can be a resident or a non-resident of England above 16 years of age who has a mailing address in the country.
How long does it take to register a company in England?
It takes 24 hours to register a limited liability company in England. Registering other types of companies there takes more time.