Services
Setting up in the UK: the five essential things to know
Despite the volatility of the past couple of years, the fundamentals of the British business environment remain unchanged.
The UK’s strength in innovation, research and development, close links to many other markets, time zone and language all still make it an attractive destination for foreign investors.
We asked experts Pramex International to share their thoughts on the five most important things for French entrepreneurs to bear in mind when setting up a company in the UK.
1. Company setup
The legal incorporation of a UK subsidiary can be completed very quickly: it normally takes no longer than two to three days. It then takes approximately three to five weeks to complete the various tax registrations (Corporation Tax, VAT, Employers PAYE). That said, the company is operational upon incorporation – it can recruit employees, enter into rental agreements, and make sales and purchases.
2. Opening a bank account
Is it easy to open a UK bank account? In short, no! The company incorporation process is different to the French system: a UK company must already be established before it can apply for a bank account.
The UK banking environment has become increasingly complex over the past 10 years as traditional high street banks seek to optimise services for SMEs. This often results in significant delays in the onboarding process, as well as higher UK revenue criteria. At various points over the past year, the website landing pages of certain UK retail banks have stated that they “are not currently opening business bank accounts to new clients”.
Fintech platforms and digital-only banks, however, have experienced rapid growth and seem to be more dynamic and flexible for newly formed SMEs.
3. Employee management
The UK employment system is relatively flexible and easy to understand, essentially set up to encourage companies to recruit and employ staff. There is no direct equivalent to the French code de travail and it is very rare to see any syndicats or conventions collectifs in the SME market. It is important for companies to establish fair employment contracts – and indeed an appropriate workplace culture with corresponding policies.
Companies are legally obliged to set up a UK Workplace Pension scheme for their workforce, but all other benefits (private medical insurance, for example) are optional.
Brexit has of course had a direct impact on the recruitment of EU residents. Companies need to obtain a UK Sponsor licence before they can apply for individual work visas. Immigration law is a complex and fast-moving area to navigate – so you should seek specialist advice if you are in any doubt.
4. UK tax rates
As things stand, Corporation Tax is at 25%, VAT at 20% (for the majority of products and services) and Employers’ National Insurance at 13.8% (from 6th November 2022).
5. Accounting obligations
There is no direct equivalent to the French plan comptable; this flexibility therefore allows UK companies to align with any group chart of accounts. As in most countries, a business must keep proper books and records, and submit various tax returns (corporation tax, VAT returns, employer submissions) within the specified deadlines.
The process for completing VAT returns has now gone digital, with further changes planned over the next couple of years. Under HMRC’s Making Tax Digital policy, returns must be submitted directly from the UK accounting software.
A 100% subsidiary of Groupe BPCE, Pramex International supports French start-ups, small, mid-size and intermediate companies in their foreign investment projects by creating local subsidiaries or through acquisitions.
A full guide to setting up a British subsidiary of your company is available on the Pramex International website.