Setting up Business in the United Kingdom - Incorporation Process & India-UK FTA Insights

Why United Kingdom Is the Right Choice for Your Business

The UK has really strong connections with India and offers a great place to start a business. The UK constitutes of England, Scotland, Wales and Northern Ireland and has one of the largest economies in the world.

Global Trade Access:

The UK has more than 70 Free Trade Agreements and is a member of the CPTPP. This gives businesses tariff-free access to more than 3.5 billion customers worldwide. Its central location makes it easy to connect with markets in Europe, Asia, the Americas and Africa.

Ease of Doing Business:

The UK ranks 10^th in the world for ease of doing business. This means setting up and running a company is much simple compared to many other countries.

Strong Economy:

The UK has one of the fastest-growing economies in Europe. This means businesses can reach customers with higher incomes and strong buying power. The UK ranks 8^th globally for talent competitiveness. It attracts skilled, English-speaking professionals with experience in both local and international markets.
 

Step-by-Step Process of Setting Up a Company in UK

Setting up business in the UK requires following a structured process. The basic setup for the business is largely the same but only a few structural differences vary by type.

Step 1: Decide on Company Type and Name

• Choose the company type (Ltd, PLC, CLG, LLP).
• Conduct a name check with Companies House to ensure availability and compliance.
• Timeline: 1 day

 

Step 2: Prepare Constitutional Documents

• Draft Memorandum of Association (founding document signed by initial members) and draft Articles of Association (governance rules, share structure).
• Decide on directors, shareholders, and people with significant control (PSC).
• Timeline: 1–5 days

 

Step 3: Provide Registered Office Address

• Choose a physical address in UK jurisdiction.
• You can use a registered office service if no physical office is available.

 

Step 4: File for Incorporation with Companies House

• Submit incorporation form online or by post.
• Include: name, address, directors, PSCs, share structure, memorandum & articles, registration fee.
• Timeline: Online within 24 hours and for post 8–10 days.
• Note: PLCs must also confirm minimum capital paid (£50,000, 25% at least).

 

Step 5: Open Business Bank Account

• Use the incorporation certificate, director IDs, proof of address, and preferably a business plan to open a UK business bank account.
• Timeline: 1–3 weeks (can take longer for non-UK resident directors)

 

Step 6: Register for Taxes and Payroll

• Register for Corporation Tax with HMRC (within 3 months of starting trade).
• If employing staff: register as employer for PAYE, National Insurance and pension contributions.
• Register for VAT if turnover exceeds threshold (£85,000).
• Timeline: 1–2 weeks

 

Step 7: Post-Incorporation Formalities

• Issue share certificates / record guarantees.
• Hold the first board meeting, record minutes.
• Maintain registers (directors, PSCs, members).
• File Confirmation Statement annually to confirm Companies House register information.

 

Estimated Total Duration:

• If online and no regulated licenses required: 2–6 weeks
• If postal filings, non-UK resident directors, or licenses required: up to 10–12 weeks
• PLC, regulated sectors, or foreign-owned entities may take longer due to approvals, minimum capital, or bank account checks.

 

Business Structures in UK

1). Sole Trader

• Minimum Capital: No capital requirement.
• Liability: Unlimited liability — the owner is personally responsible for debts.
• Governance: It is necessary to register as a sole trader with HMRC if business income exceeds £1,000 in a tax year.
• Suitability: Best for small, one-person businesses or freelancers. Not ideal for larger operations or international trade.

2). Partnership

• Minimum Capital: No minimum capital requirement.
• Liability: Each partner has unlimited personal liability for the debts and obligations of the partnership.
• Governance: Register the partnership with HMRC and designate a nominated partner. No directors or officers are needed, and roles are set by the partnership agreement or the default Partnership Act 1890
• Suitability: Best suited for two or more people sharing skills and costs, commonly family or friend-run ventures, and small professional firms like accountants or designers’

3). Limited Liability Partnership (LLP)

• Minimum Capital: No minimum capital requirement; partners contribute capital as agreed in the LLP agreement.
• Liability: Partners enjoy limited liability; their personal assets are protected.
• Governance: Must have at least two designated members; registered with Companies. House under the Limited Liability Partnerships Act 2000; required to file accounts publicly.
• Suitability: Common for small and medium-sized enterprises and firms partnering with UK professionals to limit personal risk

4). Private Limited Company (Ltd)

• Minimum Capital: No statutory minimum; can be formed with as little as £1 share capital.
• Liability: Limited liability; shareholders are only liable up to the unpaid value of their shares.
• Governance: Must be registered at Companies House, managed by directors, and subject to annual filings and public disclosure requirements.
• Suitability: Best for scaling ventures, attracting investment, startups, and professionals who want limited liability and a credible image.

5). Public Limited Company (PLC)

• Minimum Capital: £50,000 issued, at least 25% (£12,500) paid-up before trading.
• Liability: Shareholders protected up to unpaid share value.
• Governance: At least two directors, one company secretary, registered at Companies House with strict reporting and auditing rules.
• Suitability: Large, established firms raising public capital.

 

6). Branch Office / Subsidiary of a Foreign Company

• Minimum Capital: No specific requirement and depends on the parent company.
• Liability: For Branch: Parent company is fully liable for UK operations; For Subsidiary: Liability is limited to the local subsidiary; operates as a separate legal entity.
• Governance: For Branch: Register with Companies House as a UK establishment; not a separate entity; For Subsidiary: Normally set up as a private limited company, registered at Companies House.
• Suitability: Best for foreign companies seeking UK presence. Branch is simpler but riskier; subsidiary gives more credibility and local tax, contract, filing obligations. Popular for overseas expansion in IT, trading, manufacturing, and consulting.

 

Few Important Points to Consider

When setting up a business in UK, there are several key issues that go beyond the basic registration process. Understanding these points early helps avoid delays and ensures the company is structured in the most efficient way.

Acquisition of Shelf Companies

The UK market offers “shelf companies”, entities that are already registered but not actively trading. These make market entry fast. Proper due diligence is always advised before purchasing to avoid hidden liabilities

Residency and Permits

There is no legal requirement for company directors to reside in the UK, non-residents can serve as directors. The company must have a physical registered office address in the UK, but operational control can be international.
 

How Our Firm Can Help You

With our extensive experience in helping international businesses, especially in establishing a presence in Europe, our firm is well equipped to support your expansion plans in the UK. We can help you with:

• Market Study & Feasibility: Assess opportunities and viability for your business in the UK and help you build a tailored market entry roadmap.
• Partner & Investor Search: Identify local partners, distributors, or collaborators to accelerate growth.
• Incorporation & Compliance: Assistance with setting up a subsidiary or branch, opening bank accounts, providing registered office and resident director services, VAT registration, bookkeeping, and statutory filings.
• Tax & Regulatory Strategy: Choose the best canton, plan cross-border taxes efficiently, and obtain sector-specific regulatory approvals.
• Ongoing Legal Support: From corporate governance, contracts, and dispute resolution to intellectual property protection, employment law, and immigration support, we ensure your business operates smoothly.

The UK offers a strategic location, favorable tax framework, and strong business ecosystem for international companies. Let’s explore how your company can succeed in the UK!