Guide on How to Set Up a Limited Company in the UK as a Non-Resident

Setting up a limited company in the UK is a relatively straightforward process that offers numerous advantages regarding tax, limited liability, and credibility. Suppose you want to start your entrepreneurship journey in the UK as a non-resident by forming a limited company.

In that case, this guide will take you through how to set up a limited company in the UK as a non-resident with Companies House and provide insights into the associated tax benefits.

Before moving on to the company setup process, let’s learn about the basics of limited companies in the UK. So…

What Is a Limited Company? 

A limited company is a legal and separate business structure from its shareholders, owners, and directors. This implies that a company has the legal capacity to possess assets, engage in legally binding agreements, fulfill its contractual obligations, and carry out business activities in its name. 

The shareholders, owners, and directors are not personally responsible for the company’s debts or liabilities beyond the amount of their investment in the company. It offers limited liability to its shareholders, which means that their assets are not at risk if the company goes bankrupt. 

The limited company must be registered with Companies House, a government agency that keeps records of all limited companies in the UK. Upon registration, the company will be assigned a unique company registration number.

John Lewis Partnership, Virgin Atlantic, B&M Retail, Greenergy, River Island, Nestlé PLC, British Airways PLC, Vodafone PLC, and Unilever PLC are examples of UK limited companies.

Learn more about UK Limited Company.

Types of Limited Companies

Limited companies in the U.K. come in various sizes and shapes, depending on the types of businesses. The two main types of limited companies in the UK are listed below: 

Public Limited Company

The public limited company is a separate legal entity from its shareholders, owners, and directors. This means the company can own property, enter into contracts, and sue or be sued in its name. 

A public limited company is also known as a “PLC.” It offers its shares to the public. This means that anyone can buy shares in the company, not just a selected group of people. PLCs are subject to more regulation than other entities. PLCs face more restrictions than private limited companies. This is because PLCs are regarded as more risky by investors.

Cineworld Group PLC, easyJet PLC, AstraZeneca PLC, and Rolls-Royce Holdings PLC are examples of public limited companies. 

Private Limited Company

This is the most common form of a limited company. The “Ltd” suffix at the end of its name serves as a distinguishing feature. A private limited company restricts the transfer of shares and prohibits public trading.

It requires at least one director and one shareholder (who can be the same person) and cannot offer shares to the public. Ownership can be closely held, providing autonomy in decision-making.

Arcadia Group Ltd., Dyson Ltd., Innocent Drinks Ltd., Joseph Cyril Bamford Ltd., and Monzo Bank Ltd. are a few private limited companies.

There are two main types of private limited companies:

1. Private Limited Company by Shares

This is the most common form of private limited company. The shareholders who own the company are only responsible for its debts up to the amount of their investment. Shares in a private limited company can be sold to anyone but cannot be offered to the public.

2. Private Limited Company by Guarantee

A private limited company, by guarantee, is a type of company that does not have shareholders. Instead, it has members who agree to contribute a certain amount of money to the company if it goes bankrupt. Members of a private limited company can get their share of the profits by guarantee, but only if the company’s articles of association allow it. The company will not be eligible for charitable status if the profits are distributed.

In addition to the two main types of private limited companies, there are several other limited companies, including

1. Private Unlimited Company,
2. Community Interest Company,
3. Right-to-manage Company,
4. and Flat Management Company.

• Private Unlimited Company

A private unlimited company is a business structure in the United Kingdom that combines a limited company’s benefits with an unlimited company’s privacy. Like a private limited company, a private unlimited company is a separate legal entity from its owners, and its owners have limited liability for the company’s debts. 

However, unlike a private limited company, a private unlimited company is not required to file its accounts with Companies House, meaning its financial information is not publicly available.

• Community Interest Company

A CIC, or community interest company, is a limited company that benefits the community. This type of LTD company is a non-profit organization that exists to benefit the community rather than the shareholders. It must have a social purpose and reinvest its profits to fulfill that purpose.

CICs have several unique features, such as the requirement to have a community interest statement and to distribute profits for the benefit of the community.

• Right-to-manage Company

An RTM, or Right-To-Manage company, is a limited company that tenants form to manage their landlord’s property. Apartment building leaseholders established this particular type of limited-by-guarantee company to take over management of the complex from building freeholders. The RTM company is responsible for all aspects of the building’s management, including

1. Collecting and managing the service charge,
2. Upkeeping the communal areas,
3. Upholding the structure of the building,
4. Dealing with complaints from other leaseholders.

• Flat Management Company

A flat management company (FMC) is a limited company in the United Kingdom specifically formed to manage the common areas of a block of flats. This includes hallways, stairwells, gardens, and communal facilities such as gyms or swimming pools.

In a flat management company, individuals who own the flats within a building or development are usually shareholders in the management company. Each shareholder typically holds a share in the company, granting them rights and responsibilities related to property management.

Learn the differences between Ltd vs. PLC.

What Type of Limited Company Should I Set Up in the UK?

Deciding on the type of limited company to set up in the UK depends on various factors, including your business goals, scale, growth plans, risk tolerance, and how much control and privacy you desire. Here’s a breakdown:

Private Limited Company (LTD):

• Ideal for smaller businesses or startups looking for limited liability protection.
  
  
• Offers more control and privacy as information disclosure requirements are less stringent than a public limited company.
  
  
• It is suitable for businesses where the owners want to maintain more control over decision-making and avoid the extensive regulatory obligations of a public company.

Public Limited Company (PLC):

• Suitable for larger-scale businesses planning to raise significant capital by offering shares to the public.
  
  
• Provides access to a broader pool of investors and the potential for substantial growth due to increased capital availability.
  
  
• Involves more regulatory requirements, extensive disclosure obligations, and increased scrutiny from shareholders and the public.
  

Also, consider these aspects while making your decision:

• Capital Requirements: Evaluate how much capital you need to raise and whether accessing funds from the general public (PLC) or a smaller group of investors (LTD) aligns with your financial needs.

• Long-Term Goals: Assess your long-term growth plans. A PLC might provide better opportunities if you foresee substantial expansion, mergers, or acquisitions. For more controlled growth or niche operations, an LTD might suffice.

• Risk Tolerance: Assess your comfort level with the increased regulatory obligations, scrutiny, and potential loss of control associated with a PLC compared to the more private and controlled environment of an LTD.

• Privacy Concerns: Consider how much information you’re willing to disclose. PLCs have more extensive disclosure requirements, making financial and strategic information publicly accessible.

• Costs and Resources: Take into account the costs associated with both setups. PLCs have higher initial and ongoing costs due to listing, compliance, and advisor fees.

Consulting with legal and financial advisors can provide tailored advice based on your specific business plans and goals. Our legal experts can help you navigate the regulatory landscape and determine the most suitable company structure for your needs.

Legal Requirements for Limited Company

The legal requirements for a limited company in the UK vary depending on whether the company is a private limited company (PLC) or a public limited company (PLC). 

However, some general requirements apply to all limited companies:

1. Company Name: A company name is required for both limited companies, whether private or public. 
   
   
2. Registered Office: A physical address in the UK is required as the registered office address for receiving official correspondence and legal notices.
   
   
3. Directors and Shareholders:
   • At least one individual director is required for an LTD, while for a PLC, a minimum of two directors is necessary. Directors’ information (name, address, etc.) must be provided to Companies House.
     
     
   • Shareholders (owners) are required for both companies. A minimum of one shareholder is needed for an LTD, whereas a PLC requires a minimum of two shareholders.
     
     

4. Company Secretary: If required, private and public limited companies must appoint a qualified company secretary. The secretary ensures that the company complies with standard financial and legal practices.
   
   

5. Articles of Association: This document outlines the internal rules governing the company’s operations. You can use model articles or create bespoke articles that suit your company’s needs.
   
   

6. Memorandum of Association: This mandatory document outlines the company’s name, objectives, and shareholders. A MOA is a formal declaration that all of the company’s founding shareholders or guarantors have signed.
   
   

7. Statement of Capital: For a public limited company (PLC) in the UK, a statement of capital is required, which details the company’s shares, their issue prices, and the total issued share capital. The minimum issued share capital for a PLC is £50,000, which must be denominated in sterling. This requirement ensures that PLCs have a sufficient financial foundation to operate effectively.

These legal requirements are essential for establishing and operating a limited company in the UK. It is essential to follow these rules so the company stays legal. 

Below is a table summarising the requirements for setting up different types of limited companies in the UK, including non-residents: 

How Do I Set Up a Limited Company in the UK as a Non-Resident?

Now that you know the basics and requirements of limited companies in the UK, let’s talk about how to set up your own dream venture.

Preparation Before Setting Up

Before you jump to the critical steps for setting up a limited company in the UK, you must make the following preparations: 

• Choose the Right Business Structure

Your business’s size, structure, and needs will all influence the type of limited company you select. For instance, a private limited company (Ltd.) is the best option to launch a small business. PLCs are better suited for larger companies that need to raise capital from the general public. You can seek advice from any professional with years of experience. 

If you are a non-resident considering setting up a limited company in the UK, carefully considering your needs and circumstances is essential. A private limited company is a good option if you are looking for a simple and flexible structure. A PLC may be better if you want to raise capital more efficiently.

• Gather All the Required Documents

To form a company as a non-resident, you will require the following documents:

1. A valid copy of your passport, NID, or driver’s license.
2. Bank Statement.
3. Utility bills.

• Online Registration with Companies House

The process of setting up a limited company can be conveniently completed online. Companies House, the UK government agency responsible for company registration, provides a user-friendly platform for entrepreneurs to submit their applications. This digital approach ensures efficiency and reduces paperwork.

Once you determine your preferred company types, you are ready to achieve your goal. Setting up a private or public limited company in the UK as a non-resident involves several steps, with slight differences depending on whether you are establishing a Ltd. or a PLC. Here’s a guide for each:

Setting Up a Private Limited Company (Ltd) as a Non-Resident

• Select a Unique Name: Choose a unique name for your company that is not already in use and end with Ltd. for a private limited company. 
  
  

• Appoint Directors and a Company Secretary (Optional): At least one director must be appointed, who can be a non-resident. While a company secretary is not mandatory, they do not have to reside in the UK if appointed.
  
  

• Identify Shareholders and Issue Shares: Decide who will be the shareholders and how many shares each will hold.
  
  

• Prepare the Required Documents: Prepare the essential documents, including the Memorandum of Association and Articles of Association. The Memorandum of Association includes the company’s name, registered office, and the nature of its business. The Articles of Association, on the other hand, outline the company’s rules.
  
  

• Standard Industrial Classification (SIC) Code: Choose at least one SIC code that describes the company’s primary business activities.
  
  

• Share Capital: Decide on the company’s share capital and the value of each share.
  
  

• Identify People with Significant Control (PSCs): Identify and decide who will be your PSC. A PSC can be a legal entity or an individual with significant influence or control over your company. 
  
  

• Check and Keep the Necessary Records: You must check if you need to keep the necessary records about the details of directors, shareholders, and company secretaries, as well as the results of any shareholder votes and details about PSCs, etc. 
  
  

• Apply to Companies House: Once the documents are in order, register your company with Companies House. This can be done online or by post and usually involves a fee. For this, you need to apply using the IN01 form. 
  

Setting Up a Public Limited Company (PLC) as a Non-Resident

In addition to the steps for setting up a Ltd company, a PLC requires a few additional considerations:

• Increased Share Capital: A PLC must have a minimum share capital of £50,000, with at least 25% paid up before trading.
  
  

• Appoint a Qualified Company Secretary: A PLC must have a formally qualified company secretary.
  
  

• Obtain a Trading Certificate from Companies House: Before a PLC can start trading, it must obtain a trading certificate, confirming the minimum share capital requirement is met.
  
  

• Prepare for Greater Transparency and Reporting Obligations: PLCs are subject to higher disclosure and reporting requirements, mainly if their shares are publicly traded.
  
  

• Issue a Prospectus (If Offering Shares to the Public): If the PLC plans to offer the public, a detailed prospectus must be prepared and approved by the Financial Conduct Authority (FCA).
  
  

• Hold Annual General Meetings (AGMs): PLCs must hold AGMs within six months of the end of their financial year.

In both cases, whether you set up a private or public limited company, seeking legal and financial advice is advisable to navigate the specific legal and regulatory requirements, especially for non-residents unfamiliar with UK corporate law. 

Additionally, consider engaging a UK-based service provider who can assist with setting up a registered office, handling mail, and ensuring compliance with local regulations.

The Legal Duties of Running a Limited Company

Running a limited company comes with its share of legal responsibilities to ensure compliance and maintain good standing. Directors must also always act within the company’s constitution and maintain detailed financial records, a practice that supports transparency and accountability. Filing annual confirmation statements and accounts is crucial to meet reporting requirements. Furthermore, directors need to declare interest in transactions, consider stakeholders and employees, and avoid conflicts of interest. Ensuring timely tax payments and adhering to corporate reporting standards are also paramount. Compliance with these duties ensures the smooth operation and legal integrity of a limited company.

What Happened After I Formed a UK Limited Company?

After forming a UK limited company, you must be aware of several necessary steps and ongoing responsibilities to ensure your company complies with UK law and regulations.

• Companies House Communications: You’ll receive a certificate of incorporation from Companies House. This document confirms the company’s legal existence and shows the company number and date of formation.
  
  

• Set Up Records and Registers: Maintain statutory records, including a register of members, directors, and secretaries and a register of people with significant control (PSC).
  
  

• Open a Business Bank Account: Once you start your business activity, having a bank account is necessary in the UK. Open a business bank account for handling finances, which is essential for keeping personal and business finances separate. 

Having a UK bank account enhances the credibility and professionalism of a non-resident limited company. It demonstrates financial stability and increases trust among potential clients, partners, and suppliers.

• Accounting and Bookkeeping: Implement an accounting system to track expenses, income, taxes, and payroll. You may need to hire an accountant or use accounting software.
  
  

• VAT Registration (if applicable): If your company’s turnover is above the VAT threshold (which is subject to change), you must register for VAT with HM Revenue & Customs (HMRC). You can also register voluntarily if it benefits your business.
  
  

• Corporation Tax Registration: You must register your company with HMRC for corporation tax within three months of starting the business. You’ll receive a Unique Taxpayer Reference (UTR) and must file a company tax return annually.
  
  

• PAYE System (if employing staff): If your company employs staff, including yourself as a director, you must register as an employer with HMRC, run a payroll, and submit PAYE (Pay As You Earn) information to HMRC. This includes deducting income tax and national insurance contributions.
  
  

• Annual Confirmation Statement: You must file a statement with Companies House annually. This statement confirms that important company information, such as the registered office address and details of directors and PSC, is current.
  
  

• Annual Accounts and Reports: Prepare and file annual accounts with Companies House and HMRC. These should give an accurate and fair view of the company’s finances.
  
  

• Insurance: Depending on your business type, you may need specific types of insurance, such as professional indemnity insurance or employers’ liability insurance.
  
  

• Compliance with Data Protection Laws: If your company processes personal data, ensure you comply with data protection laws, such as the UK GDPR.
  
  

• Legal and Regulatory Compliance: Stay informed about and comply with any other legal and industry-specific regulations that apply to your business.
  
  

• Dividends and Director’s Salary: Decide on how you’ll extract profits from your company, whether through a salary, dividends, or a combination of both.
  
  

• Meeting Minutes and Resolutions: Keep records of board meetings and resolutions passed.
  
  

• Business Growth and Strategy: Beyond compliance, focus on business development, marketing strategies, and customer acquisition to grow your business.

Remember, a limited company’s ongoing administration and compliance can be complex, especially if you’re unfamiliar with UK business laws. It’s often advisable to seek professional advice to meet your legal obligations.

What Should I Remember to Set Up a Limited Company in the UK for Tax Purposes?

Alongside the legal duties and responsibilities, you must remember a few factors when setting up a limited company in the UK as a non-resident. You must file your annual tax return to ensure that you are paying your federal income tax. Once your limited company is registered with Companies House, you should consider:

• Filing for corporation tax with the help of any business consulting firm, legal experts, or an agent who works for tax filing in the UK This is the tax companies pay on their profits.
  
  

• Once you file for corporation tax, you must visit HMRC to file a company tax return. The deadline for filing your tax return is 12 months after the end of your company’s financial year.
  
  

• Furthermore, as mentioned above, you must register for PAYE to pay the company’s directors, including yourself.

Can I set up a Limited Company in the UK Online? 

Yes, you can set up a limited company in the UK online through any professional business formation service. You can register a company with our Business Globalizer UK company formation service.

How Can Business Globalizer Help You?

As a small business owner, having suitable systems to take advantage of a limited company without spending hours on tedious administrative tasks is critical. Register your new UK company from virtually anywhere with Business Globalizer. We’ll walk you through the entire company formation process, from choosing a name to submitting your application to Companies House. Remember, you can start a business with one person or a group; it’s entirely up to you.

Contact us for detailed registration instructions. Fill out the form, and we will take care of the rest.

FAQs on Setting Up a Limited Company in the UK

Q1: How long does setting up a limited company in the UK take?

Answer: The timing of setting up a limited company depends on the process or company formation services you choose. Using the postal service, this will take approximately 8–10 days. Online registration with Companies House is typically quicker, with many companies, like Business Globalizer registered within a few hours or a day.

Q2: Do I need Companies House to set up a company online? 

Answer: Companies House is the government agency that registers businesses in the UK. If you formed your business as a sole trader, you don’t need Companies House. But to set up a limited company online, you must register with Companies House. You can register your company online through the Companies House website.

Q3: Can a foreigner set up a limited company in the UK?

Answer: Yes, foreigners can set up limited companies in the UK without any restrictions. There are no nationality or residency requirements for company directors or shareholders. The only requirement is that the company must have a registered office address in the UK.

Q4: How much does it cost to register a limited company? 

Answer: The cost of registering a limited company in the UK depends on the method you use and the speed of service you require.

Q5: What taxes will the limited company pay in the UK? 

Answer: A UK limited company is subject to several vital taxes:

• Corporation Tax: On its profits.
  
  
• Value Added Tax (VAT): If its taxable turnover exceeds the VAT threshold, or you want to register for VAT voluntarily. 
  
  
• Pay As You Earn (PAYE): Income tax and National Insurance contributions on employees’ salaries.
  
  
• Business Rates: For properties used for business purposes.
  
  
• Dividend Tax: On dividends paid to shareholders.
  
  
• Capital Gains Tax: On profits from selling assets for more than they cost.

Q6: Can you form a limited company or use an agent?

Answer: Certainly. You can form a limited company or use an agent. But if you are a non-resident, we suggest you choose a company formation agent. Agents can save you a lot of time by taking care of the registration process. Using an agent can give you peace of mind, knowing that your company is registered correctly and that you comply with all legal requirements.

Final Thoughts

In conclusion, you should remember that while there are numerous benefits to setting up a company, responsibilities and administrative requirements are also involved. This includes filing accounts with Companies House, regular financial reporting, compliance with company law, or measuring the higher administrative costs. Consulting with legal and financial professionals can help you set up a limited company in the UK as a non-resident based on your business goals and circumstances.