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The United Kingdom encourages and promotes entrepreneurship, with millions of self-employed company owners, sole traders, and freelancers. The processes and documentation for how to start a business in the UK aren’t immediately evident to the budding entrepreneur, though.

Starting a business in the United Kingdom can be a complex business, especially if you’re from outside of the European Union. This guide offers advice on starting a UK business, including the different types of company structures, tax, administration, and whether you need a visa. It includes advice on the following:

Business culture in the United Kingdom

The UK has around six million private sector businesses, according to official government data, and this figure is growing. Since 2000, the number of businesses in the UK has increased by 2.4 million.

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Three-quarters of UK businesses don’t have any employees, meaning they’re owned by self-employed sole-traders or partnerships. Around five million UK residents are registered as self-employed, amounting to 15% of the overall workforce.How to start a business in the UK

Data from the Office for National Statistics show the most common sectors for self-employed workers are as follows: construction (920,000), scientific or technical activities (643,000), vehicle sales or repairs (396,000), administration and support services (361,000), and health and social work (349,000).How to start a business in the UK

Men are far more likely to be self-employed, with women making up just 33% of the self-employed workforce. People of Pakistani or Bangladeshi origin (24%) make up the biggest proportion of self-employed workers, followed by people from Chinese and other Asian backgrounds (16%), and people of white heritage (15)

Who can start a business in the United Kingdom?

As it stands, EU and EEA nationals don’t need special permission to start businesses in the UK, with the exception of residents from Bulgaria and Romania. The UK still negotiating its withdrawal from the EU, however, so these rules could yet change.

If you’re from a country outside of the EU or EEA, you may need a visa. Prospective entrepreneurs can receive favorable treatment in the UK’s points-based immigration system, but you’ll need to adhere to several rules to get Tier 1 status.

There are a variety of different business types in the UK, and you’ll need to choose the option that most closely fits your company’s structure.

Sole trader

If you want to work as a self-employed person in the UK or run a business on your own, you can become a sole trader.

As a sole trader, you can keep all of your business profits. You must make your own arrangements to pay income tax and National Insurance. You are personally liable for all business debts.

Freelancers in the UK are also classed as sole traders. To work as a freelancer in the UK, all you need to do is to register as self-employed and make sure that you pay the right amounts of tax and National Insurance.

General partnership

This business type involves two or more individuals (or companies) setting up together, with responsibility shared equally between partners. Profits are also shared equally, with each partner paying tax on their share and jointly liable for debts and losses. This structure is often suitable for small businesses.

Limited partnership

These partnerships are similar to general partnerships but have at least one general partner who runs the business and is personally liable for any business debts. The partnership also has at least one limited partner whose input is purely financial and who is only liable up to the amount they’ve contributed.

Limited liability partnership (LLP)

This partnership agreement involves neither partner being personally liable for debts that the business can’t pay. This partnership requires a written LLP agreement and must register with Companies House, the UK’s registrar of companies.

Private Limited Company (Ltd)

This business type is a separate legal entity from the people that run it. Limited companies are incorporated through registration at Companies House and need at least one director and one shareholder. Shares in the company cannot be traded publicly.

Public Limited Company (PLC)

PLCs differ from limited companies in that their shares may be traded publicly. You need to have a minimum share capital of £50,000, with at least 25% paid prior to start-up.

Unlimited company

This company type isn’t very common in the UK. It involves shareholders having joint unlimited liability for business debts, meaning they can be covered with personal assets in the event of the business assets not meeting debts.

Social enterprise

This is a UK business type that exists to invest any profits made to meet charitable, social, or community objectives rather than to distribute among shareholders.

Social enterprises are structured similarly to limited companies and include charities, cooperatives, and community interest companies (CIC).

Unincorporated association

This is an unregistered, unincorporated form of non-profit organization that can include voluntary groups, small community groups, and sports clubs.

Offshore company

An offshore company is registered, established, or incorporated outside of your country of residence. Offshore incorporation is a straightforward process in popular offshore financial centers and tax havens around the world.

Offshore structures can provide a wide range of benefits to the company and company principals, but you need to fully research the rules before setting up.

How to start a business in the UK as an expat

If you want to become self-employed or start a business in the UK as a foreigner, you’ll need to follow these steps:

1. Check that you can legally start a business

You’ll need to make sure that your immigration status allows you to set up a business. For non-EU/EFTA nationals, this may mean ensuring that you have the necessary visa and residence permit.

2. Write a business plan

UK entrepreneurs need a business plan. This will help you determine whether your business ideas are likely to succeed and be sustainable.

You’ll need to research the market and prepare budget forecasts. You can download the business plan and cash flow forecast templates from the UK government website.

3. Decide on your structure

As above, you’ll need to choose the business structure that best represents your enterprise.

4. Choose a business name and address

If you’re a sole trader, you can just use your own name if you want. You’ll need an address for registering your UK business for tax purposes and joining the company register.

Only limited companies need to register their name, though others can register as a trademark to stop anyone else from trading under the name.

If you’re setting up a limited company, you must appoint directors and a company secretary, work out your shares and shareholders, write your memorandum and articles of association, open a separate bank account, and register for corporation tax.

5. Register with HM Revenue and Customs

You will need to register your UK business with HMRC for tax purposes. Limited Companies need to register with Companies House at the cost of £12 (online) or £40 (by mail).

6. Check any additional rules for your type of business

Depending on the nature of your UK business, there may be additional requirements, such as:

  • Licenses or permits (e.g., for selling food, playing music, or trading in the street)
  • Insurance
  • Rules to follow if you buy or sell goods abroad or store personal information

How to obtain a business visa in the United Kingdom

You can work as a freelancer, self-employed, or start a business in the UK as long as you have the right to work and live In Uk.

For non-EU/EFTA nationals, this may mean having a relevant work visa and biometric residence permit. See our guide to UK visas and residence permits for more information.

If you are looking to come and start a business in the UK or pursue a business idea, there are a number of visas you can apply for.

Innovator visa

Innovator visas have similar rules to the now-defunct entrepreneur visas.

You must have at least £50,000 in investment capital, or have invested this sum already in the previous year. If you haven’t invested the money yourself, it must come from a government-endorsed funding competition, a venture capital fund registered with the Financial Conduct Authority, or a UK government department.

You must also adhere to some other rules too, such as demonstrating you are from a majority English-speaking country or have taken an accredited English language examination.

Visas cost £1,021 and last for three years. You can extend your visa by a further three years if you meet the criteria.

Start-up visa

You can apply for a start-up visa if you have an endorsement from a UK higher education institution or an organization with a history of supporting UK entrepreneurs.

You’ll need to prove your business idea is new, innovative, and with potential for growth. Fees range from £308 to £363.

You can stay in the UK for two years with a start-up visa. You can’t extend a start-up visa, but they can switch to an entrepreneur visa upon expiry in some circumstances.

Investor visa

If you have £2 million to invest in the UK economy, you can apply for an investor visa. It costs £1,623 to apply and the earliest you can submit an application is three months before you plan to travel.

Investor visas allow you to stay in the UK for a maximum of three years and four months. You can extend your visa by a further two years subject to meeting the criteria.

 



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