A UNITED KINGDOM (UK) COMPANY

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1 A UNITED KINGDOM (UK) COMPANY GENERAL INFORMATIONS Incorporation time: 13 days Shelf companies: Yes Accounting: Yes Secretary: Yes Nominee Shareholder: Yes Nominee director: Yes 1 GBP = 1.66 History of the United Kingdom The United Kingdom, situated off the North West coast of Europe, has one of the oldest constitutional monarchies in the world. Its capital, London, is the leading financial centre of Europe and one of the most influential cities in the world. Formerly a colonial empire, the country still has 14 overseas territories, and was the birthplace of the industrial revolution. Today, the United Kingdom is the world s seventh largest economy. The UK as an Onshore Financial Centre The United Kingdom is an ideal choice for setting up onshore/offshore entities which benefit from a tax of approximately 5% through a holding company. Company formation in the UK is very simple thanks to its Common Law legal system and relatively low management fees. The preferred type of onshore company is the Private Limited Company which, when combined with the UK Agency structure, makes it possible to significantly reduce tax leakage. The advantage of the United Kingdom is that for offshore entities, corporate income tax can be reduced to around 3% or 4% and VAT does not apply. Additionally, the country s excellent international reputation is beneficial for brand image and public perception. Page 1

2 United Kingdom Summary London is the world s leading financial centre. It is part of Europe, and has many advantages, including a low tax rate, resulting from an Agency structure, and an excellent reputation. The United Kingdom offers the best possible market conditions for international business and therefore is an ideal jurisdiction for all kinds of trading, service and holding operations. Types of UK Company Creating a company in the United Kingdom involves six steps and takes around two weeks. Types of companies Minimum Share Capital Number of Shareholders, Members or Partners Limited Company (LTD) 1 GBP One shareholder, limited liability. Public Limited Company (PLC) Minimum of 50,000 GBP, 25% of which must be paid up upon formation One shareholder, limited liability. Limited Partnership (LLP) No minimum capital Minimum of two partners, limited liability. Partnership No minimum capital Minimum of two partners, unlimited liability for debts and obligations, liability is joint and several. Page 2

3 Limited Company (LTD) The LTD is the most common type of company in the United Kingdom. It provides a flexible structure and is quick to create; it also makes it possible to transfer shares or bring in other investors or shareholders. The company may be owned by legal or natural persons, and can therefore be controlled by an offshore company, which makes it possible to pass on 95% of revenue under an Agency arrangement. Public Limited Company (PLC) The PLC is a company with a single partner and shareholder, and cannot include any others. The Limited Partnership (LLP) An LLP is an incorporated partnership which takes the form of a company having two partners governed by a contract. These partners can be either natural persons, or offshore companies. This type of company has no units or shares, but is instead an equal partnership. The LLP structure usually consists of two offshore companies, located for example in Belize and the British Virgin Islands, or in Hong Kong and Gibraltar if the company is more concerned with reputation. Page 3

4 UK Tax Rates The corporate tax rate is 20% for all british companies and whatever the turnover realized. A reform just been passed, which will come into force in 2020, reduces this rate to 17%. However tax credits are given when taxes are paid abroad. Commercial expenses or charitable contributions may be deducted for tax purposes. Other taxes are also applicable to businesses, such as national insurance contributions (NIC), if the company has UK employees, and council tax, if the company owns UK property. VAT is levied at a basic rate of 20% with a concession to 5% for certain goods and services, and exemptions on certain supplies such as most foods and children s clothes. Personal income tax is tiered and assessed in the following manner : Tax Bracket (GBP) Tax 0 to 2, % 2,441 to 37, % 37,401 to above 40 % Personal allowances, professional expenses and certain share plans, retirement or savings plans can be deducted for tax purposes. Page 4

5 Accounting Overview British companies must keep accounting records, in which all operations are included, as well as audited annual financial statements consisting of an annual report, a profit and loss statement, a balance sheet, a statement of cash flows prepared in accordance with the principles of GAAP (Generally Accepted Accounting Practices). Companies having fewer than 50 employees, gross assets below GBP3.26m and turnover below GBP6.5m may apply for an exemption from the requirement to have their accounts audited. For more information contact us: info@fidusuisse-offshore.com Or visit our website: Page 5