9 reasons to start a UK business
Should you consider expanding into the UK?
There are so many variables to take into account when considering business expansion. How much is UK corporate tax? Are there tax incentives for businesses expanding to the UK? What’s the condition of the workforce and infrastructure?
Then, there’s Brexit, which has cast a shadow of unpredictability.
Still, the UK is the 6th largest economy in the world, and undoubtedly, it has a wealth of resources, benefits, and government incentives that can support your business’s growth.
So, what are the benefits of a UK business expansion? In this article, we’ll explore 10 reasons to start doing business in the UK.
Let’s get started.
(Heads up: This article contains public information that was correct at the time of publishing. This information shouldn’t be considered financial, tax or legal advice – please do your own homework and speak to a financial, tax or legal advisor!)
1. Doing business in the UK is relatively easy
First things first: Is it easy to do business in the UK? In short, yes.
The World Bank ranks countries with an ease of doing business score. The score is calculated by aggregating scores on 10 important business topics:
- Starting a business
- Dealing with construction permits
- Getting electricity
- Registering property
- Getting credit
- Protecting minority investors
- Paying taxes
- Trading across borders
- Enforcing contracts
- Resolving insolvency
According to this scoring model, the UK is one of the easiest places to do business in the world.
Specifically, the UK comes in 8th position. Here are the top 10 countries ranked by ease of doing business:
- New Zealand
- Hong Kong, SAR China
- Korea, Rep.
- United States
- United Kingdom
This score means that the UK’s regulatory environment is conducive to expanding your business. For example, UK incorporation is a relatively simple process.
Finally, it’s worth noting another obvious factor that makes the UK an ideal home for your business expansion: The UK is the home of the English language.
The English language is the fastest spreading language in human history. Back in 2012, Harvard Business Review declared English “the global language of business,” and it’s fair to say the trend has continued in the years since.
Large companies around the world are embracing English in the workplace, and having a workforce that’s already fluent at a native level is certain to be a significant business advantage.
2. The UK values and supports business innovation
If your business is at the forefront of industry development and innovation, a UK business expansion could be rewarding.
According to the Global Innovation Index, the UK is the fourth most innovative country in the world, after Switzerland, Sweden, and the U.S.
The UK government has a dedicated agency designed to help stimulate UK business innovation. Innovate UK aims to aid businesses in developing ideas and turning them into commercial successes.
The agency provides access to innovation funding and will help to connect your UK business to researchers, collaborators, and potential customers.
There are also generous incentives and tax credits for UK businesses investing in research and development on innovative science and technology projects – this R&D Expenditure Tax Credit can even be claimed on unsuccessful projects.
Plus, the Patent Box scheme provides a whopping 9% reduction in UK corporation tax on profits from inventions patented in the UK.
You can find a complete list of the opportunities available to innovators on the UK Research and Innovation website.
All in all, innovative companies that start a UK business expansion have much to gain.
3. There’s a skilled workforce
International business expansions are heavily dependent on the availability of a proficient domestic workforce.
Thankfully, UK businesses benefit from a pool of world-class talent and skilled labour in all major industries.
The UK has one of the largest workforces in Europe, at 32 million workers. This workforce has grown steadily over the last decade.
Plus, the UK boasts four of the world’s top 15 universities: The University of Oxford, The University of Cambridge, Imperial College London, and University College London.
In fact, Oxford and Cambridge are ranked first and third in the world, respectively.
According to the Global Talent Competitiveness Index, the UK is one of the top countries in the world when it comes to attracting and retaining talent.
The UK currently scores 12th place, beating countries such as Japan, France, South Korea, Saudi Arabia, China, and India.
Essentially, the UK workforce is likely to be able to support your labour needs.
But how much will a skilled workforce cost?
4. UK labour costs are some of the lowest in western Europe
The average cost of labour is a significant factor that must be taken into account when considering business expansion.
Unlike their neighbours in Western Europe, UK businesses can take advantage of relatively low labour costs.
According to Eurostat, the statistical office of the European Union, the UK’s average hourly labour costs are lower than most Western European countries, including Italy, Ireland, Austria, Germany, France, and the Netherlands.
Plus, UK businesses can utilise the government’s apprenticeship scheme to claim government incentives when hiring.
Here’s how it works: If you start a UK business expansion, your company could hire apprentices with qualifications ranging from Level 2 (GCSE–equivalent) to degree and masters level.
Currently, for every apprentice hired before the 31st of January 2021, you’ll be able to claim £2,000 if they’re aged 16 to 24, and up to £1,500 if they are 25 or over.
Apprenticeships also provide other benefits:
- 78% of employers reported improved productivity
- 90% of apprentices stay with a company after completing an apprenticeship
So, the UK not only has a large, skilled workforce, it’s also likely to be cost-effective.
5. There’s a strong infrastructure
A robust, efficient infrastructure is essential to the success of any business expansion.
As a highly developed country, the UK’s infrastructure is well-suited to supporting the growth of your UK business expansion. Additionally, there are ongoing improvements in critical areas, such as transportation, energy, and telecommunication.
In fact, the World Bank’s Logistics Performance Index helps illustrate the attractiveness of doing business in the UK. This index uses both qualitative and quantitative measures to build logistic profiles for 160 countries.
Currently, the UK ranks as the 9th most logistics-friendly country in the world.
Larger companies interested in building new premises or customising an existing property will enjoy a straightforward planning process. The UK uses local planning authorities – these authorities approve almost 90% of planning applications with 75% completed within just three months.
UK businesses also benefit from a range of lease and rental property options. Many serviced offices provide flexible arrangements to match your UK business expansion.
Whatever your logistical needs are, the UK is well-equipped to support them.
6. There are enterprise zones that provide government support
If you decide to undertake a UK business expansion, you may want to consider using one of the country’s many enterprise zones.
Enterprise zones are designated areas that provide businesses with advantageous government support, such as business rate discounts on property, tax relief, and a simplified planning process. Each zone also provides special infrastructure suited to various industries.
These zones have been specifically designed to help foster business growth for new and expanding companies.
There are currently more than 50 existing and planned zones across England and Wales, 16 in Scotland, and several in Northern Ireland.
7. There’s a relatively low corporate tax rate
When considering a UK business expansion, there’s no doubt that a deciding factor is the corporate tax rate, and how challenging it is to navigate the tax system.
So, how does the UK measure up? Well, the UK Corporation Tax rate is currently just 19%.
As a result, the UK Corporation Tax rate is the third-lowest in the G20, after Singapore and Switzerland.
If you expand your business to the UK, you’ll only need to pay corporation tax on UK profits. According to the UK Department for International Trade:
“Any company resident in the UK must pay UK Corporation Tax on company profits. Any overseas company with a UK branch or office must pay UK Corporation Tax on company profits arising in the UK.”
Now, what about double taxation?
8. The UK has many double taxation treaties
If you start a UK business expansion, you’ll also benefit from double taxation agreements. These treaties ensure that UK businesses won’t pay corporation tax on foreign dividends.
The UK has double tax treaties with many countries, including:
- Hong Kong
- Saudi Arabia
- South Korea
9. There are tax reliefs and incentives
UK businesses also benefit from tax policies and venture capital schemes designed to help small and medium enterprises expand and flourish.
Another key benefit of the UK business tax system is that “the UK does not have a withholding tax on dividends paid by UK companies to shareholders in another country.” This makes it easier to distribute shares.
Bottom line, the tax system is ideal for a successful UK business expansion.
Nobody knows how Brexit will play out. However, changes in any business environment can create opportunities.
Summary: What Are the Benefits of Starting a UK Business Expansion?
The 6th largest economy in the world has a lot going for it. In summary, here are 10 reasons to start a UK business expansion.
- According to the World Bank, the UK has a high Ease of Doing Business Score, ranking 8th globally.
- UK Corporation Tax is the third-lowest in the G20 at just 19%.
- UK businesses benefit from many double taxation treaties with other countries.
- There are many tax reliefs and government incentives designed to foster UK business growth.
- According to the Global Innovation Index, the UK is the fourth most innovative country in the world.
- The UK has a large, skilled workforce and ranks 12th in the Global Talent Competitiveness Index.
- UK labour costs are some of the lowest in Western Europe.
- According to the World Bank’s Logistics Performance Index, the UK ranks as the 9th most logistics-friendly country in the world.
- There are many Enterprise Zones, which provide UK businesses with advantageous government support..