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Doing Business in the UK in 2024

Thinking of doing business in the UK? Here is what every global employer needs to know now...

Gone are the days when ‘business as usual’ meant sticking to familiar territories. For global employers, the UK presents itself as a land brimming with business opportunities

But doing business in the UK market sure comes with its own rules that you won’t find anywhere else. 

With a GDP of over $3.2 trillion in 2023, the UK is the world’s sixth-largest economy. This shows just how attractive it is for businesses around the world. 

Today, business in the UK signals a commitment to engaging with some of the world’s most influential markets. With at least 18 UK companies in the Fortune Global 500, the message is clear: the UK is a pivotal hub for international businesses.

Yet, for every success story, there are challenges untold. The UK market demands savvy, understanding, and adaptability. 

Thankfully, in this guide, we’ll discuss what it takes and how to do business in the UK. We’ll take you through the essential bits – from economic landscapes to legal regulations, glittering opportunities, and gritty challenges. 

UK Business Guides

An Overview of the UK Economy

The UK, with its robust economy, is a hub for businesses eager to make their mark on a global scale. 

Its economy, with a GDP surpassing $3.2 trillion at the end of 2023, showcases resilience and growth potential. The service sector, especially financial services, stands tall, contributing significantly to the economy. London, often hailed as the financial capital of the world, is a powerhouse of economic activity, home to over 1 million private sector businesses.

Beyond finance, the technology sector in the UK is thriving, rivaling its counterpart in Silicon Valley. The UK tech sector, particularly in areas like artificial intelligence, fintech, and clean tech, has attracted over $996.8 billion in investment, a figure that puts it firmly on the global tech map.

Then there’s the creative industry, which might make you think of the Beatles or the British invasion of music, but it’s much more. This sector, including film, fashion, and digital media, contributes an astonishing £115 billion to the UK economy. It’s a sector ripe with opportunities for businesses looking to tap into creativity and innovation.

Healthcare and pharmaceuticals in the UK are also not to be overlooked. The sector, underpinned by world-leading research and development, has been pivotal, especially in recent times, contributing significantly to the global health landscape. According to Bioscience and health technology sector statistics the life sciences sector alone employs over 304,200 people across the country, making it a vital part of the UK’s economic health.

Understanding the UK’s Business Regulations

Business regulations in England may seem complex at first glance, but once you get the hang of it, it’s quite straightforward. 

As a global employer considering business in England, understanding this legal landscape is crucial to avoid penalties and make informed decisions that can propel your business forward.

Employment Laws

The UK prides itself on robust employment legislation that’s designed to protect both you and your employees. 

For instance, the UK’s Employment Rights Act 1996 outlines everything from job contracts to unfair dismissal. It’s essential for you as an employer to grasp these rules to manage your team effectively and legally.

Payroll Regulations 

You must familiarize yourself with HM Revenue & Customs (HMRC) requirements, including PAYE (Pay As You Earn) and the National Insurance contributions — taxes paid by employers, employees, and the self-employed in the UK.

Now, how does all this impact your HR and payroll decisions? It’s simple: knowledge is power. Understanding these regulations means you can make informed decisions, from hiring practices to payroll management

For businesses looking to outsource HR and payroll, these regulations underscore the importance of choosing a provider that not only understands the local landscape but can navigate it with finesse.

The Benefits of Doing Business in the UK

The UK boasts a unique combination of factors that make it a powerhouse for global businesses. These are some of the key benefits that make doing business in the UK a strategic choice for your company:

1. A Hub of Skilled Talent

The UK has a highly skilled and diverse workforce. According to a report by the Office for National Statistics, the UK has one of the highest proportions of degree-educated individuals in the workforce among major economies. This talent pool is a goldmine for businesses, especially those in knowledge-intensive sectors. When you establish your business in the UK, you’re harnessing intellectual capital that can propel your company to new heights.

2. A Stable and Predictable Business Environment

Stability is the watchword in the UK’s business landscape. Ranked by the World Bank as one of the easiest places to do business, the UK’s stable political and legal systems provide a predictable environment for business operations. This stability is a critical factor, especially when venturing into new international markets. It means you can plan and execute your business strategies with confidence, knowing that the ground beneath your feet is solid.

3. A Magnet for Innovation

The UK is a hub for innovation. With significant investments in research and development, the UK government is committed to fostering an environment where innovation thrives. This focus is evident in the flourishing tech sector, where the UK stands as a global leader. By doing business in the UK, you position your company in a landscape ripe for innovation and growth, ready to tap into cutting-edge advancements and collaborative opportunities.

4. A Gateway to Global Markets

Geographically and economically, the UK serves as a gateway to other global markets. Its strategic location makes it a stepping stone to the European market, and its strong trade relationships extend across continents. This aspect of doing business in the UK is particularly advantageous for businesses looking to expand their international footprint. With the UK as your base, you can easily connect and engage with markets worldwide, from Europe to North America and beyond.

5. A Culture of Entrepreneurship

There’s an entrepreneurial spirit woven into the UK’s cultural fabric. This spirit is supported by a favorable business environment that encourages growth and innovation. The UK government offers various incentives for businesses, from tax reliefs to funding opportunities. As a result, the UK is home to a vibrant community of start-ups and entrepreneurs, creating a dynamic and stimulating business ecosystem.

The Other Side of the Coin 

Let’s face it, doing business in the United Kingdom isn’t just tea parties and rain; it has its fair share of challenges, especially for companies looking to outsource HR and payroll or expand internationally.

High Costs

One of the first speed bumps you might hit in the UK is the cost factor. London, for example, often ranks among the top 10 most expensive cities in the world for business operations.

Also, according to Mercer’s Cost of Living Survey, London holds a lofty position in the global rankings for expensive living. This isn’t limited to personal expenses; business costs, including office space and salaries, also feel the pinch.

However, it’s not all doom and gloom. Many businesses opt for remote or hybrid working models, significantly reducing overhead costs. Plus, various regions in the UK, like Manchester or Leeds, offer a more cost-effective base while still providing access to a skilled workforce.

Market Competition

The UK’s business arena is competitive, fast-paced, and not for the faint-hearted. It’s home to numerous established businesses and startups, all vying for their market share.

For instance, the tech sector in the UK is booming, with London Tech Week highlighting the city as Europe’s answer to Silicon Valley. While this means more competition, it also signifies a vibrant, innovative market.

The key is differentiation. Understanding your niche and offering something unique can help you stand out. Also, leveraging local expertise through partnerships or hiring knowledgeable staff can provide valuable insights into the UK market’s nuances.

How to Expand Your Business into the UK

When you’re set on expanding your business into the UK, the big question isn’t just ‘why’ but ‘how’. 

Here are some solid strategies for setting up shop in the land of double-decker buses and unpredictable weather:

Subsidiary Incorporation

Incorporating a subsidiary in the UK means setting up a new, independent business entity. This move offers you full control over operations, but with great power comes great responsibility – and paperwork. You must adhere to UK corporate laws, which can be as complex as a Shakespearean play. 

On the bright side, this option offers substantial credibility within the UK market, a factor that’s crucial if your business strategy is centered around long-term presence and brand establishment

Just remember, with a subsidiary, you’re playing the long game.

Branch Registration

If you fancy a less intensive approach, registering a branch might be up your alley. Think of it as extending the branches of your existing business tree into the UK. It’s simpler than setting up a subsidiary and involves fewer legal gymnastics. However, it’s important to note that your parent company will be directly responsible for all activities of the UK branch. This means any legal hiccups in the UK can reverberate back to your main office, and let’s be honest, no one wants that kind of echo.

PEO/EOR 

Now, if you’re looking for a quick and relatively painless entry into the UK market, partnering with a Professional Employer Organization (PEO) or Employer of Record (EOR) is a better strategy These entities can hire employees on your behalf in the UK, handling all the HR and legal intricacies like pros. It’s like having a Monopoly card that lets you skip ahead to “Go” without worrying about buying all the properties along the way. 

Here’s the catch: you’ll have less direct control over your workforce, but if speed and ease are your priorities, this might be a winning move.

Each of these paths is unique. What works for one business might not be the cup of tea for another. Consider your business size, resources, and long-term goals. And of course, always keep abreast with the latest UK business regulations and statistics to ensure you’re playing by the rules of the game

Look Before You Leap!

Every step you take can significantly influence your journey’s success, especially in a market as nuanced as the UK. So, what do you need to weigh before taking the plunge?

Taxation

The UK’s tax environment could be a game-changer for your business. With a corporate tax rate of 25% in 2024, it’s relatively competitive. But there’s more to it than just the rate. Value Added Tax (VAT), business rates, and other tax considerations play a crucial role. For instance, if your business’s taxable turnover exceeds £85,000, you’ll need to register for VAT. 

Sailing through this tax landscape demands a keen eye and a solid understanding, as missteps could be costly. Consulting with tax experts or exploring resources from HM Revenue & Customs can provide essential insights.

Employment Laws

Employment laws in the UK are robust, and designed to protect workers while maintaining a fair playground for employers. From ensuring equality and diversity in the workplace to adhering to specific contractual and termination guidelines, understanding these laws is crucial. 

Did you know that in the UK, employees are entitled to at least 28 days of paid leave annually, including public holidays? That’s a detail you can’t afford to overlook. Getting a grasp on these laws will not only ensure compliance but also aid in building a loyal, productive workforce.

Beyond Fish and Chips

The UK is rich in cultural diversity, and understanding these nuances is key to your business’s integration and success. This isn’t just about embracing fish and chips as a national dish; it’s about recognizing the regional differences within the UK, from business etiquette to consumer behaviors. 

For instance, approaches that work in cosmopolitan London may not resonate in the historical streets of Edinburgh. Acknowledging and adapting to these cultural variations can elevate your business strategy and help forge stronger local connections.

Real Estate Considerations

The choice of your business location in the UK can have far-reaching implications. Whether it’s a bustling city center or a quieter suburb, each location comes with its own set of advantages and challenges. Costs, accessibility, and proximity to key markets are critical factors to consider. 

According to a report from Knight Frank, prime office rents in London’s West End were among the highest globally in 2023. This highlights the importance of thorough market research and perhaps consultation with real estate experts to find the right spot for your venture.

Building Networks and Relationships

Never underestimate the power of networking in the UK. Building robust relationships with local businesses, chambers of commerce, and industry groups can open doors to invaluable opportunities and insights. For instance, the British Chambers of Commerce provides a vast network of business connections and support. Such affiliations can be instrumental in understanding market trends, regulatory changes, and emerging opportunities. 

Doing Business in UK — Our Take?

The UK is a market brimming with potential, thanks to its strong economy and diverse consumer base. You’re looking at access to top-tier talent, a workforce known for its innovation and professionalism.

Sure, the UK’s regulations can seem tricky, but it’s worth the effort. The legal framework is transparent, promoting a stable, business-friendly environment

Being part of the UK business scene means rubbing shoulders with innovation. It’s a hub for industries leading the charge in fintech, biotech, and more. So, doing business in the UK is a strategic play towards global prominence

Frequently Asked Questions

Should I expand my business into the UK?

Expanding your business into the UK can be a strategic move, given its large, diverse market and status as a global business hub. However, this decision should be based on careful consideration of various factors:

  1. Market Research: Understand the demand for your products or services in the UK. Assess the competition and local consumer preferences.
  2. Regulatory Environment: Familiarize yourself with the UK’s legal and regulatory framework, especially in areas like taxation, employment laws, and data protection.
  3. Cultural Differences: Be aware of cultural nuances in business practices and consumer behavior. Adaptation to local customs can be crucial for success.
  4. Economic Factors: Consider economic indicators such as currency stability, inflation rates, and economic growth forecasts.
  5. HR and Payroll: If you’re looking to outsource HR and payroll, ensure you understand the local employment laws and HR practices, which might differ significantly from your home country.
  6. Costs and Funding: Analyze the costs of setting up and running your business in the UK, including taxes, rents, wages, and any potential financial incentives or support from the UK government.
  7. Brexit Impact: Post-Brexit regulations and trade agreements could affect your business, particularly if you plan to use the UK as a gateway to the EU market.

If these factors align with your business objectives and capabilities, the UK could offer significant opportunities for growth. 

What are the steps for registering a company in the UK?

Registering a company in the UK is a straightforward process, usually completed online. Here are the key steps:

  1. Choose a Company Name: Ensure it’s unique and not similar to existing names in the UK Companies House register.
  2. Determine Company Structure: Decide whether it will be a sole trader, partnership, or limited company. Each has different legal and tax implications.
  3. Identify Directors and Shareholders: For limited companies, appoint at least one director and identify shareholders or guarantors.
  4. Prepare Documents: Create a ‘memorandum of association’ and ‘articles of association’ outlining the company’s rules and structure.
  5. Register with Companies House: Complete the registration online or by post. The fee for online registration is typically lower.
  6. Register for Tax: Upon incorporation, register your company with HM Revenue and Customs (HMRC) for corporation tax.
  7. Set Up Records: Establish a system for keeping statutory company records and financial accounts.
  8. Understand Employer Responsibilities: If you’re employing staff, register for PAYE with HMRC, set up workplace pensions, and understand employment rights.

These steps can be managed independently or with the help of a service provider. It’s crucial to adhere to all legal requirements to ensure compliance and a smooth start to your business in the UK.

cropped Milly Barker AIV Photo
Article By
Milly is an international lawyer and tech entrepreneur who has advised companies on expanding globally for over 5 years. She is an advocate of remote hiring and regularly consults on future of work matters. Milly founded RemotePad to help employers learn more about building and growing international teams.

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