Despite the pros and cons of Brexit, the UK remains a viable, business-friendly environment to invest, trade, and expand. Note that the UK boasts of a mature, high-spending consumer market and an open, liberal economy, world-class talent, and a business-friendly regulatory environment.

Have it in mind that the language, legal system, funding environment, time zone, and lack of red tape ensure that the UK maintains its stand as one of the easiest markets to start and grow a business even as a foreigner.

As a foreigner in the UK, starting a business ensures you get access to a market of more than 60 million people, a vast range of suppliers and partners, and also gain from a wide array of programs primarily meant to help businesses of all types and sizes succeed, including a £100 billion infrastructure spending commitment.

However, note that numerous alterations have started to emerge in the UK, making opening a business in the UK a daunting task. One of the notable issues foreigners face is the immigration system.

According to reports, certain recent changes in the immigration system of the UK have made it very challenging for foreigners to obtain the legal document necessary to start a business. Although the UK is a very multi-cultural country, it is imperative you understand the “English way” of doing things and also the culture, which may vary exponentially from your own.

Starting a business in the UK as a foreigner may seem like a very challenging task, but it can be quite easy as long as you go about it the right way with an effective business plan. Note that going via the right channels ensures that you do the right thing once and for all.

Steps and Requirements to Start a Business in the UK

The process of starting a business in the UK is the same for foreigners and UK nationals alike. While it is very possible to start a successful business as a foreigner in the UK, have in mind that there are necessary criteria you have to meet. These criteria and steps may include;

  1. Understand Your Visa

Right before you start thinking of starting a business in the UK, you have to first ensure that you can live and work legally in the UK. As a foreigner, you will need a visa. There are numerous types of visas in the UK and the process will depend on the country you are applying from.

EU citizens were in times past allowed to live and work freely in the UK without a visa – and vice versa – but since the Brexit transition period ended on 1st January 2021, all EU nationals are now expected to obtain a valid visa just the same way non-EU foreign nationals do.

However, anyone already living in the UK or applying for the EU Settlement Scheme before the transition period ended may have been permitted to continue living in the UK with permission to keep living and working freely. Nonetheless, there are specific visas for those who wish to start a business in the UK. Eligibility criteria can also be strict and very demanding.

Business Visa Types Available for Foreigners

Truth be told, the UK remains a melting pot of various cultures and is well regarded amongst foreign nationals as a place to start a new life and, along with it, a new business. If as a foreigner you are eager to live and do business in the UK, here are visa types to consider;

  1. Innovator Visa

This visa is mainly for individuals who are eager to start an innovative business in the UK. The business is expected to be different from anything else on the market, and an approved body must have to endorse that idea. Eligibility criteria are quite stringent and you will be expected to have access to at least £50,000 in investment funds and show where this funding came from.

You will also need to show you have enough personal savings to support yourself. You’ll be required to show that you’ve had at least £1,270 in your bank account for 28 consecutive days before you apply for, extend, or switch to this visa.

You will need to be fluent and also prove that you can speak, read and write English to level B2 on the Common European Framework of Reference for Languages (CEFR) scale. With this visa, you can stay in the UK for three years and there’s no limit to the number of extensions you can get.

  1. Start-Up Visa

Just like the Innovator visa, you will be expected to have an innovative business idea that’s quite different from anything else on the market. While there are no mandatory investment funding requirements, you will have to prove you’ve had at least £1,270 in your bank account for 28 consecutive days before you apply for (or switch to) this visa.

In addition, you also have to be endorsed by an authorized body that is either a UK higher education institution or a business organization well recognized for supporting UK entrepreneurs. Nonetheless, you are only allowed to stay for two years and can’t extend the visa, although you may be able to switch to an Innovator visa.

Also, have it in mind that the English language requirement is the same as the Innovator visa (level B2 on the Common European Framework of Reference for Languages (CEFR) scale). Fees can be less exorbitant when compared to the Innovator visa, at £363 to apply or £493 to switch, and there’s the same £55 reduction for eligible countries too.

  1. Global Talent Visa

Also note that you are allowed to apply for a Global Talent visa if you are a leader, or potential leader, in Academia or research, Arts and culture, or even Digital technology. However, your application will have to be endorsed by a notable authority with expertise in your field.

Although the Home Office most often handles this for you, have it in mind that how you apply depends on your field. Note that individuals on a Global Talent visa can be self-employed or directors of companies and can live and work in the UK for up to five years at a time.

  1. Tier 1 (Entrepreneur) Visa

This visa is no longer available to new applicants in the UK; however, those currently in the UK with this visa can apply to extend theirs. Howbeit, you will have to be eligible and also satisfy certain criteria.

  • You must have invested at least £200,000 in a UK business (excluding any commercial property or director’s loan), or £50,000 if your initial application was based on having funds from an approved funding source
  • You must have registered as a director or as self-employed no more than six months after you were permitted to stay in the UK under the original visa
  • Show you’ve been self-employed, a member of a partnership, or working as a director of a business three months before you apply
  • Have created at least two full-time jobs that have existed for at least 12 months
  1. Write Your New Business Plan

Starting a business in the UK as a foreigner, just as with every other business, requires a viable business plan. Have it in mind that a well-researched business plan will provide adequate information about the viability of the idea.

Owing to that, it is necessary to invest adequate time into researching the market and also arrange your financial forecasts. Even if you already have an existing business, you still have to put together another business plan to direct and accommodate your entry into the UK market.

  1. Choose a Legal Structure

The next step is to choose a legal structure for your business. Since you already know what your business will do, you must decide on a legal structure. You may also hire a legal advisor or lawyer to complete this step to ensure you avoid legal troubles later on. Here are the various types of legal structures in the UK:

  • Sole trader: This is the simplest business structure, but with no legal distinction between you and your business
  • Partnership: This is ideal especially when you are starting a business with a business partner or partners
  • Limited company: Note that this is a complex structure with plenty of admin, but your business is legally differentiated from you as an individual.
  1. Register Your Business

Just like it was noted above, aside from visa requirements, the process of registering or starting a business in the UK is the same for foreigners and UK nationals alike. In the UK, there are no extra immigration criteria to be met or extra fees or charges for foreign nationals. However, to register your business with the Companies House, you’ll need the following:

  • Company Name
  • Business Address: You will be expected to have a UK address
  • Director Information: Depending on your business structure, you may be expected to have at least one director
  • Shareholders: Public trading companies are expected to issue shares at the start. At least one shareholder and all their details are required. This can be the director or someone else
  • Documents of Formation: In the UK, there are two sets of documents required to register a business: a memorandum of association and articles of association.

How to Register as an Overseas Company in the UK

In the UK, an overseas company is any company that is not incorporated in Scotland, England & Wales or Northern Ireland. Note that any overseas company with a UK “establishment” is expected to register information of both the overseas company and establishment at UK Companies House.

While the rules are explicitly noted in the Companies Act 2006 and The Overseas Companies Regulations 2009 (Regulations), have it in mind that these only apply to overseas companies and not other forms of business vehicles, such as partnerships.

Once an overseas company has established a UK establishment, it is expected to fill and submit a form OS IN01 to Companies House coupled with a copy of its constitutional documents and latest annual accounts (with a certified translation into English if necessary). Note that besides the basic details of the overseas company, Form OS IN01 also warrants that:

  • The overseas company pick a name for the UK establishment, and this will have to be used as the overseas company’s name when trading in the UK (note that the overseas company is expected to adhere to trading disclosure rules when using this name)
  • Once registered, have it in mind that the Companies House will assign the overseas company with a code beginning with “FC” and each UK establishment will be assigned a “BR” code.
  • Appointing an agent or distributor;
  • Appointing a franchisee; or
  • Incorporating a Scottish or English company as a wholly-owned subsidiary of the overseas company.
  • Overseas companies should note that documents filed (such as accounts) are always publicly accessible through the Companies House website.
  1. Register For Tax

Once you have completed all the steps above, the last step will be to register for tax. This is, without doubt, one of the most vital steps that require a little homework. In the UK, you are expected to register for corporation tax if you are incorporated, and whatever your structure, self-employed people are also mandated to register as a Self Assessment taxpayer with HMRC.

Once the registration and legal structure of a new business have been decided, it will have to be ‘incorporated’. This simply entails registering with Companies House and HMRC for tax purposes. Forfeiting your tax payment may lead to the closing of your business, which may also affect your residency in the UK.

Once you have registered your company, you should expect the organization tasked with handling the national register of companies – Her Majesty’s Revenue and Customs HMRC – to send you the information required to register your business as it relates to tax matters. The following information will be required:

  • Company’s registration number
  • Start date of work
  • The end date when accounts will be prepared annually

Once you have registered your business for Tax Corporation, it is also necessary that you keep records of the following:

  • Annual Accounts of the company, including the profit and loss
  • Purchase and sales invoices
  • Order and delivery notes
  • Bank statements, checkbooks, and electronically evidence of payment received
  • Cash books
  • Credit notes and debit notes
  • VAT records
  • Payroll records
  • Any other relevant business information

How Brexit Affects Foreign Investors in the UK

The Brexit transition period ended on 31 December 2020, therefore new rules kicked in on 1 January 2021. This simply entails that people from the EU, Switzerland, Norway, Iceland, or Liechtenstein who now want to start a business in the UK are expected to apply for a visa, in the same way as non-EU citizens. There are numerous ways Brexit has affected or is still affecting foreign investors in the UK. These ways include;

  1. Confidence in the UK

Since Brexit, reports have it that the FTSE 100 share index has been fickle, and the Sterling rate hasn’t returned to pre-Brexit levels. According to experts, confidence in UK businesses will continue to be unstable and unpredictable for the foreseeable future, and this has in many ways affected foreign investors. However, there are still numerous legal services available to foreign investors looking to reduce the negative effects of Brexit.

  1. Disruption in Supply Chain

According to reports, a good number of companies stockpiled before Brexit, primarily to skip tariffs for importing EU goods. However, to ensure good relations between UK and EU businesses, it’s necessary to guarantee transparency about any charges or tariffs. Also, note there are logistical problems with the supply chain – delays haven’t been helped by the pandemic of recent years too.

  1. Less EU Restrictions

After Brexit, note that the UK is less restricted by certain EU regulations. Experts believe that Brexit has had a positive impact on the mindset and willingness of foreign investors since they can now trade more freely even with non-EU markets. Presently, the UK is working to put in place new trade agreements with many non-EU countries around the world and this is good news for foreign investors in and outside of the UK.

  1. Becoming an AEO

Have it in mind that foreign investors in the UK can now apply for Authorized Economic Operator status. This more or less means you’ll have an easier time moving goods between countries, as you are seen as ‘trusted’. Note that the HMRC awards AEO recognition, and acceptance depends on things like compliance, records, and dedication to customs. Howbeit, becoming an AEO business can be quite challenging, and smaller businesses may prefer to use a broker or agent.

  1. Opportunity For Growth

According to recent reports, emerging markets like China, South Africa, and Brazil now account for more consumer spending every year. Note that the fall of the pound makes British products cheaper for international markets, which could genuinely increase their demand, and also create a viable opportunity for foreign investors.

However, as a foreign investor in the UK, it is still imperative you research which countries need your products and services and work them into your strategy.

Conclusion

Indeed, starting and running a new business in a foreign land or expanding into new markets like the UK can be a vital growth strategy that a good percentage of businesses need to take. However, you must take your time to research if this is the right move for your business.

Also, remember that there is a vast range of regulations connected with living and working in the UK as a foreign national. Immigration laws are rigidly enforced; therefore ensure you keep yourself updated. Also, consider getting professional legal and financial advice if you are not sure about the process or anything.