Brexit has become a reality. From 1 February 2020, the UK is no longer a member of the great community, the European Union. It took as long as two years to negotiate this historic event and to establish the relevant procedures. The transition period lasted until 31 December 2020. With the end of this process and the UK's exit from the ranks of the EU, several new legal conditions for running your own business in the UK have emerged. Today we will try to dispel at least some of the doubts, based on the most common questions from our clients. So how do you do business in England after Brexit?
By reading the following article you will learn:
- What forms of business in the UK do you have to choose from as an entrepreneur?
- How do I set up a business in England?
- What taxes do you pay on doing business in the UK?
- What about VAT?
- Will visas for workers return?
- Is it possible to run a business in England while living in Poland?
Read also: Doing business in Germany or in Poland - which to choose?
Forms of business in the UK
As an initial step, you should start by identifying the form in which you operate your business (or intend to operate it) in the UK. Each of the forms below has its own specificities. Consequently - depending on your choice - it will involve different formalities. The following forms of business are available in the UK:
- (self-employed) self-employment,
- (LTD) Limited Company,
- (English. Partnership) partnership,
- (sc. LLP) a Limited Liability Partnership,
- (abbr. PLC) Public Limited Company.
How to do business in England after Brexit - how to set up a business in the UK?
Probably many people are bothered by this very question. Often, unfamiliarity with the procedure can, at the outset, discourage you from taking any step that would go towards starting your own business in the UK.
In Poland, sole proprietorship is the form most often chosen by entrepreneurs. In the UK, the equivalent is the so-called self-employed. This is a fairly simple form of business in the UK - due to the lack of unnecessary formalities. Setting up a business in the UK as self-employment is not complicated. To do so, you will need to:
- meet visa conditions (live in the UK for at least 183 days a year) and have a NIN, i.e. be covered by National Insurance,
- have established company data - including a specific industry, address and contact number,
- inform HMRC (i.e. HM Revenue & Customs) that you are starting a self-employment business - this can be done not only by turning up in person at the office, but also by phone, letter or online.
An LTD company can be incorporated without being a UK resident. It is one of the most popular forms of company, ralso by foreign persons. PThe opulence of LTD is also due to the fact that it cangn It can be set up with relatively little investment. When registering, only the amount of the initial capital is declared. No deposit is required. In order to be able to open a business in the UK in the form of a LTD, conditions such as, but not limited to:
- declaration of the amount of initial capital,
- the appointment of at least one director aged min. 16 years of age,
- company registration at a UK address,
- having at least one shareholder in the company.
Taxes in the UK and running a business
The self-employed pay personal income tax (PIT). They are also required to pay National Insurance contributions. The amount of National Insurancecharges are defined on an ongoing basis in the new tax year. Another obligation imposed on the self-employed is the obligation to file an annual tax return.
The question of the amount of tax due depends on the amount of income and, to put it in 'ranges', the issue is as follows:
- exempt from taxation - income up to GBP 10,600,
- tax rate 20%- income GBP 10,600 - GBP 42,385
- 40% tax rate - income above GBP 42,386.
The self-employed person is also required to keep adequate financial records and retain all documents and accounts for a period of five years.
In contrast, in the case of LTD companies, taxation is relatively kind to the entrepreneur. First of all, it should be mentioned that - in the case of companies with legal personality - the finances of the company are separated from those of its owners. As in Poland, the company's shareholders are liable for the company's debts only up to the amount of their contribution. The profits of a capital company are subject to corporation tax. The basic tax rates are as follows:
- 20% tax for companies with an income of no more than GBP 300,000.00,
- 21% tax for companies with an income of more than GBP 300,000.00.
How to do business in England after Brexit? VAT and EU countries
One of the most important changes in doing business in the UK after Brexit is the issue of VAT on goods sent from Poland or vice versa. This is because od 1 January 2021 in the UK European rules on the settlement of VAT no longer apply. The previous rules gave entrepreneurs the opportunity to move goods and services around seamlessly.
In the relationship between the EU and the UK, there is no longer any place for such transactions as intra-Community:
- supply/acquisition of goods (B2C transactions),
- distance selling (intra-Community sale of goods B2C),
but there are exports/imports of goods.
Exception is the territory of Northern Ireland, where EU VAT regulations will continue to apply, but only in respect of commodity trading. Traders making mail order sales to or from Northern Ireland are still treated as EU taxpayers.
In contrast, transactions services, carried out with entities from the UK (including Northern Ireland) are treated as transactions with entities from non-EU countries. In this case, the movement of goods from the UK to Poland (or vice versa) must be presented to the customs authorities in Poland and the UK.
Will visas for workers return?
This is one of the most common questions raised by our clients. For a long time, the British labour market boasted unrestricted access for people from abroad. From 1 January 2021, taking up employment in the British Isles by foreign nationals will involvethat is subject to the need to obtain the relevant permit and visa.
Obtaining a visa, in the vast majority of cases, will involve a job offer from a specific company that is doing business specifically in England. Such a company must, of course, be licensed to engage with people from outside the UK.
Is it possible to run a business in England while living in Poland?
It might probably seem to many that, after Brexit, this form of business would be impossible. Nothing could be further from the truth. Running a business in England while living in Poland is possible. Such activity is possible, for example, in the form of a company with a legal personality. In such a case, tax settlement also takes place in England. It is therefore done with the English tax office.
Read also: Brexit and family matters
How to do business in England after Brexit? Summary
Brexit undoubtedly brings with it changes. Whether they are right or wrong - time will tell. The process is likely to cause much concern for entrepreneurs whose centre of interest is the British Isles. The UK government has made many changes to the rules - both in terms of owners of LTD companies and other forms of UK business.
You have doubts or are not sure how toregister a company in the UK? Or would you like to discuss the requirements for with changes and new regulations? We are at your disposal from Monday to Friday from 9.00 to 17.00, on the telephone number +48 606 608 089.
