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United Kingdom

We can help you incorporate in United Kingdom

Private company limited by shares

The UK Private limited company is a well-recognized and reputable business structure incorporated in one of the major international financial and trade centers worldwide with a long proven track record of fiscal and legislative stability.

UK Limited companies could be used as holding vehicles, taking advantage of the over 100 tax treaties that the UK has concluded, tax-exemption on capital gains on the sale of shares that fulfills certain conditions, tax exemption on dividends received from both local and foreign sources and no withholding tax on dividends paid to non-residents.

Furthermore, a company may elect to be exempted on non-UK profits of a Permanent Establishment in a country where the UK has concluded a tax treaty with.

UK Limited companies also benefit from an ideal environment and a mature finance market for entrepreneurs and startups to seek funding, attract investors, gain access to high-skilled employees and high-quality business services.

Exploitation of IP may benefit from a lower effective tax rate of 10%. Profits may include a significant part of the trading profit from the sales of a product that includes a patent, not just income from patent royalties.

In addition, incorporating in the UK provides a broad range of payment processing services and access to merchant accounts.

Private companies limited by shares in the UK enjoy a fast and cost-effective registration procedure and simple ongoing compliance requirements.

If the Limited company accrues more than GBP 85,000 that is derived from local earnings, then it must register for the UK VAT.

The UK is a common law based legal system which is very scrupulous in respect of private property. An independent judicial system in which the rule of law applies to legal and contractual procedures.

UK private limited companies enjoy high reputation and are excellent vehicles to conduct international commercial activities, as a holding company, IP business, investment company, access to payment processing services and merchant accounts and for startups seeking financing.


Tax residency – A company is tax resident in the United Kingdom if it is incorporated in the UK or its place of central management and control is in the UK.

Basis – Companies residents in the UK are taxed on their worldwide income. Foreign profits and losses of a foreign P.E. may be excluded by making an irrevocable election.

Tax rate – Corporate tax standard rate is 25%.

A diverted profits tax may be levied at 25% on diverted profits of company groups creating a tax benefit by using transactions or legal entities that lack economic substance or companies that have structured their UK activities to avoid setting a permanent establishment.

Companies conducting certain activities, such as oil, gas, banking or insurance activities are subject to a special tax regime.

Capital gains - Capital Gains are subject to Corporate Income Tax. However, an exemption may apply to capital gains from the disposal of shares from both UK and foreign subsidiaries, provided that the selling company has continuously owned at least 10% of share for at least 12 months of the 24 months before the transaction, among other conditions.

Dividends -  Dividends received from resident or non-resident entities are generally tax-exempt subject to certain conditions (10% ownership threshold, double tax treaty with non-discrimination clause, and underlying subsidiary conducting active business, among others).

Interests - Interest income is usually subject to taxation at standard rates.

Royalties – Royalties are usually taxed as ordinary income if they arise from a trade. Royalties from intellectual property (IP) not comprising a trade will be taxed as income from intangible fixed assets.

Foreign-source income – Foreign-source income is usually taxable, but a tax credit for foreign tax paid is usually available, either under a treaty or through the unliteral relief rules.

However, a company may elect to be exempted on non-UK profits of a Permanent Establishment in a country where the UK has concluded a tax treaty with. The election is irrevocable and relief of P.E. losses may be denied.

Withholding taxes – UK companies are not usually required to withhold tax on their payments on dividends to non-residents. Royalties and interests paid abroad are subject to a withholding tax at a 20% rate. Tax may be reduced or exempt due to a tax treaty.

Losses – Losses arising from taxable income may be carried forward indefinitely. Carryback of losses to the preceding year is permitted.

Inventory - Inventory valuations may be made by book and tax methods. In general, lower of cost or net realizable value valuation will be acceptable. First in first out method (FIFO) is permitted, while the Last in first out method (LIFO) is not allowed for taxation purposes.

Anti-avoidance rules – The transfer pricing regime in the United Kingdom is comprehensive and it follows the OECD’s principles. It is required that companies prepare documentation to prove compliance with that a given transactions is in arm’s length. There may be exemptions excluding SMEs and dormant companies from the regime.

There may be debt capital rules limiting deductions that can be taken for financing costs.

When a UK company has an interest (direct or indirect) of at least 25% in a foreign entity, CFC provisions may apply. If CFC rules apply, relevant profits of the controlled foreign entity are attributable to its UK shareholder.

Labor taxes – Employers and employees are required to make contributions to the National Insurance at 13.8% and 12%, respectively, on employees’ income above GBP 157 per week.  Businesses may be exempt from the first GBP 3,000 per year.

Tax credits and incentives – A tax credit for foreign tax paid is usually available, either under a tax treaty or through the unliteral relief rules.

There are several tax incentives for companies in the form of enhanced tax depreciation allowances.

There is also usually available an annual investment allowance of 100% on the first GBP 200,000 per year of capital expenditure incurred.

SMEs may claim a deduction equal to 230% of the qualifying expenditure on R&D in the year in which it is incurred, which can be surrendered for a cash payment (at a rate of GBP 33.35 for each GBP 100 of qualifying R&D spend) by companies that are trading at a loss or have not yet started to trade.

If taxable profits can be attributed to the exploitation of patents, a lower effective tax rate of 10% may apply. Profits may include a significant part of the trading profit from the sales of a product that includes a patent, not just income from patent royalties.

Compliance – On average, a Limited company in UK may require 8 payments and 110 hours per year to prepare, file and pay taxes.

Personal income tax – An individual is tax resident in the UK if he or she spends at least 183 days in a year within the country or his or her only home is in the UK for at least 91 days in a year or work full-time in the UK or fulfills one of the previous conditions during the three preceding years.

If the individual is resident but not domiciled (permanent home) in the UK, his or her investment income and capital gains will be only taxed if are remitted to the UK.

Personal income tax rates are progressive up to 45% on income exceeding GBP 150,000. Dividends are also taxed at progressive rates (7.5%, 32.5% and 38.1%) with an allowance of GBP 5,000.

Interest income is taxable as ordinary income, but a 0% may apply to the first GBP 5,000. Rental income is taxed depending on the location of the property.

Capital gains are taxed separately. The first GBP 11,700 may be tax-exempt. Gains exceeding this amount up to 34,500 may be taxed at 10% and 20% on the excess.

Other taxes – Local authorities levy real property tax on business premises. There is a stamp duty of 0.5% on the transfer of UK shares payable by the transferee. Stamp duty land tax applies on transfers of real property, rates are between 0% and 15%. There is an Annual tax on enveloped dwellings (ATED) levied to companies who own residential properties valued at more than GBP 500,000.

There is also an inheritance tax up to 40%. The total tax-free allowance for a surviving spouse/partner is GBP 1,000,000. UK does not levy wealth taxes.

V.A.T. standard rate is 20%, reduced rates of 5% and 0% may apply to certain items.

  • Offshore Income Tax Exemption
  • Offshore capital gains tax exemption
  • Offshore dividends tax exemption
  • CFC Rules
  • Thin Capitalisation Rules
  • Patent Box
  • Tax Incentives & Credits
  • Property Tax
  • Wealth tax
  • Estate inheritance tax
  • Transfer tax
  • Capital duties
  • 25% Offshore Income Tax Rate
  • 25% Corporate Tax Rate
  • 25% Capital Gains Tax Rate
  • 25% Dividends Received
  • 0% Dividends Withholding Tax Rate
  • 20% Interests Withholding Tax Rate
  • 20% Royalties Withholding Tax Rate
  • 1 Losses carryback (years)
  • Indefinitely Losses carryforward (years)
  • FIFO Inventory methods permitted
  • 12.00% Social Security Employee
  • 13.80% Social Security Employer
  • 45% Personal Income Tax Rate
  • 20% VAT Rate
  • 142 Tax Treaties

Country details

United Kingdom
English (United Kingdom), cy-GB, Gaelic (Scotland)

The United Kingdom of Great Britain and Northern Ireland (UK), is a state located in the northwest of Continental Europe. Its territory is formed geographically by the island of Great Britain, the northeast of the island of Ireland and small adjacent islands. Northern Ireland is the only part of the country with a land border, which separates it from the Republic of Ireland.

Great Britain delimits to the north and the west by the Atlantic Ocean, to the east by the North Sea, to the south by the English Channel and to the west by the Irish Sea.

The UK is a unitary state comprised of four constituent nations, Scotland, Wales, England and Northern Ireland, and several overseas territories. Populated by more than 65 million people.

The capital, London, on the River Thames, is home of British Parliament, Big Ben and the 11th-century Tower. Its official legal tender currency is the Pound Sterling (GBP), being the fourth most traded currency in the international exchange market behind the US$, the euro and the Japanese yen.

Although, UK is still a member of the European Union, its citizens voted in a referendum on June 23rd 2016, the untying of the state to the EU, the so-called BREXIT. Its terms are still being negotiated, with a 2 year term to become effective.

The United Kingdom is a parliamentary monarchy whose head of state is Isabel II. She is also the Head of State for the other fifteen countries of the Commonwealth of Nations, placing the United Kingdom in a personal union with those nations.

It has a parliamentary government, based on the Westminster system, which has been emulated around the world, one of the legacies of the British Empire. The Parliament of the United Kingdom, which meets in the Palace of Westminster has two chambers: the House of Commons (elected by the people) and the House of Lords. Any law passed by parliament requires real consent to become law. The fact that the decentralized parliament in Scotland and the assemblies in Northern Ireland and Wales are not sovereign bodies and can be abolished by the British Parliament makes the latter the most important legislative body in the country.

The United Kingdom is one of the world’s most developed countries. It is the fifth largest economy and the second largest in Europe after Germany, and ahead of France.

Its technologically developed industry is comprised mainly of machinery, transport equipment (vehicles, railways and aeronautics) and chemicals. UK is also the second European producer of oil and gas, ahead of Norway.

The services sector is the major GDP contributor, which includes the stock market, banking services and insurance companies. The London Stock Exchange is the second largest financial market after New York.

Its agriculture is highly mechanized, its main productions are potatoes, beets, wheat and barley. However, it only accounts for only 1% of GDP and only 2% of purchasing power parity. Livestock is significant, especially sheep and cattle, being a large European producer of milk and its derivatives.

Tax treaties

Country Type Date Signed
Myanmar DTC  1950-03-13
Pakistan DTC  1986-11-24
Guernsey DTC  1952-06-24
Algeria DTC  2015-02-18
Russian Federation DTC  1994-02-15
Mexico DTC  1994-06-02
Faroe Islands DTC  2007-06-20
Kiribati DTC  1950-05-10
Lesotho DTC  1997-12-17
Sierra Leone DTC  1947-12-19
Netherlands DTC  1980-11-07
Turks and Caicos Islands TIEA 2009-07-22
Libya DTC  2008-08-17
Japan DTC  2006-02-02
Indonesia DTC  1993-04-05
Egypt DTC  1977-05-25
Uruguay TIEA 2013-10-14
Spain DTC  2013-03-14
Montserrat DTC  1947-12-19
Zambia DTC  1973-03-22
Liechtenstein TIEA 2009-08-11
Switzerland DTC  1977-12-08
Liberia TIEA 2010-11-07
Argentina DTC  1996-01-03
Saudi Arabia DTC  2007-10-31
Côte d'Ivoire DTC  1985-06-20
Hungary DTC  2011-09-07
Finland DTC  1969-07-17
United States DTC  2001-07-24
Tuvalu DTC  1950-05-10
Belize TIEA 2010-03-25
Iceland DTC  2013-12-17
Estonia DTC  1994-05-12
Saint Vincent and the Grenadines TIEA 2010-01-18
Morocco DTC  1981-09-08
Bahamas, The TIEA 2009-10-29
Solomon Islands DTC  1950-05-10
Panama DTC  2013-07-29
Senegal DTC  2015-02-26
Luxembourg DTC  1967-05-24
Sweden DTC  1983-08-30
Isle of Man TIEA 2008-09-29
Thailand DTC  1981-02-18
Hong Kong, China DTC  2010-06-21
Trinidad and Tobago DTC  1982-12-31
Poland DTC  2006-07-20
Kazakhstan DTC  1994-03-21
Jordan DTC  2001-07-22
Azerbaijan DTC  1994-02-23
Zimbabwe DTC  1982-10-19
Antigua and Barbuda TIEA 2010-01-19
Bermuda TIEA 2007-12-05
Armenia DTC  2011-07-13
Cyprus DTC  1974-06-20
Botswana DTC  2005-09-09
Mongolia DTC  1996-04-23
Fiji DTC  1975-12-21
Belgium DTC  1987-06-01
Germany DTC  2010-05-30
Nigeria DTC  1987-06-09
Jersey TIEA 2009-03-10
Swaziland DTC  1968-11-26
Venezuela DTC  1996-03-11
Lithuania DTC  2001-03-19
Qatar DTC  2009-06-25
Norway DTC  2013-03-14
Georgia DTC  2004-07-13
Aruba TIEA 2010-11-05
Uzbekistan DTC  1993-10-15
Mauritius DTC  1981-02-11
Malawi DTC  1955-11-25
Viet nam DTC  1994-04-09
Canada DTC  1978-09-08
Denmark DTC  1980-11-11
Ghana DTC  1993-01-20
New Zealand DTC  1983-08-04
Kuwait DTC  1999-07-21
Gibraltar TIEA 2009-08-27
Ethiopia DTC  2011-06-09
Israel DTC  1970-04-20
Grenada DTC  1949-03-04
Ukraine DTC  1993-02-10
Turkmenistan DTC  1985-07-31
Tajikistan DTC  1985-07-31
South Africa DTC  2002-07-04
Belarus DTC  1985-07-31
Anguilla TIEA 2009-07-20
Marshall Islands TIEA 2012-03-20
Latvia DTC  1996-05-08
Saint Lucia TIEA 2010-01-18
China DTC  1984-07-26
Australia DTC  2003-08-21
Malta DTC  1994-05-12
Sint Maarten TIEA 2010-09-10
Italy DTC  1988-10-21
Croatia DTC  1981-11-06
Kenya DTC  1973-07-31
San Marino TIEA 2010-02-16
Curaçao TIEA 2010-09-10
Romania DTC  1975-09-18
Moldova, Republic of DTC  2007-11-08
Brazil TIEA 2012-09-28
Bolivia DTC  1994-11-03
Former Yugoslav Republic of Macedonia DTC  2006-11-08
Chile DTC  2003-07-12
Dominica TIEA 2010-03-31
Namibia DTC  1962-05-28
Papua New Guinea DTC  1991-09-17
Philippines DTC  1976-06-10
Cayman Islands DTC  2009-06-15
Oman DTC  1998-02-23
Greece DTC  1953-06-25
Korea, Republic of DTC  1996-10-25
Slovakia DTC  1990-11-05
Austria DTC  1969-04-30
Serbia DTC  1981-11-06
France DTC  2008-06-19
Singapore DTC  1997-02-12
Ireland DTC  1976-06-02
Saint Kitts and Nevis TIEA 2010-01-18
Portugal DTC  1968-03-27
Montenegro DTC  1981-11-06
Bahrain DTC  2010-03-10
Bosnia and Herzegovina DTC  1981-11-06
Turkey DTC  1986-02-19
Bangladesh DTC  1979-08-08
Sri Lanka DTC  1979-06-21
Albania DTC  2013-03-26
Barbados DTC  2012-04-26
India DTC  1993-01-25
Tunisia DTC  1982-12-15
Gambia, The DTC  1980-05-20
Jamaica DTC  1973-03-16
Brunei Darussalam DTC  1950-12-08
Czech Republic DTC  1990-11-05
Sudan DTC  1975-03-08
Uganda DTC  1992-12-23
Malaysia DTC  1996-12-10
Bulgaria DTC  1987-09-16
Macao, China TIEA 2014-09-03
Slovenia DTC  2007-11-13
Guyana DTC  1992-08-31

Tax treaties Map



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