Company Formation in the UK? Why Form a UK Limited Company?

The 11th European directive

Since 1993, any citizen of the European Community can form a company in a European Member Country of its choice (without any obligation of being resident) in accordance with the company law of the Country Member, based on the 11th Council Directive of Europe (99/66/CCE) of 21st December 1992.

We shall therefore search for the European country with the lowest incoporation costs, the best tax rates and the greatest ease of operation: The answer is by far the UK and Company Formation in the UK.

Which legal entity should I choose?

In Europe, British companies offer the best possible conditions for forming and operating a company.

There are two types of companies predominant in the United Kingdom:

1/ the Public Limited Company (known as PLC) which is open to investment by the general public by means of share purchase.

2/ the Private Limited Company (known as Ltd) which is a company who's liability is limited to the value of shares purchased by its members, its shares are not available for purchase by the general public.

It is the latter which is of interest to us.

Private Limited Companies are governed by "The Companies Act 1985" which was modified in 1989 to allow harmonisation at European Community level. This Act sets out the legal responsibilities and limitations of liability of the companies shareholders. The Act offers many advantages to the directors and shareholders regarding maters such as bankruptcy and conditions for release of capital.

Which are the advantages of forming a company in the UK?

- Contribution and release of non regulated and non taxed capital
- Protection by law of the company's registered name
- No minimum fixed charge (price of tax) for starting up your company not even in case of losses
- Simple, quick and cheap incorporation formalities
- Simple and logical administration and operation
- Possibility to remain anonymous
- Responsibility of managers is limited to 1.50€ (1£)
- Reduced and minimal rigidity (administrative, legal and tax)
- Favourable taxation:

New Taxation Rates 2013

Company Tax	Small Companies Or Small Profits Rate	Medium Sized Companies Or Main Sized Companies	Large Companies
Taxable benefit Section*	0 - 300.000	300.001 - 1.500.000	>1.500.001
Tax Rate 2013 tax fraction 3/400	20%	23% - Tax allowance**	23%**
Tax Rate 2012 tax fraction 1/100	20%	24% - Tax allowance**	24%**

* The taxable benefit: corresponds to the global turnover with a deduction of the authorized expenses of the company.

** The tax allowance, applied on Medium sized companies, is really easy to calculate:

- Let’s suppose that your turnover is 1.500.000 Pounds.
- You earned a benefit of 500.000 Pounds. (After paying all the expenses: employees, office material, registration, accountancy, offices, phones, and travels…).

• 1. Calculate the Corporate tax (upon benefit): Benefit x Corporate tax in %
  -> 500.000 * 23% = 115.000 Pounds as a Corporate tax.
  (You can claim the many tax relieves that exist to encourage British medium sized companies). With a qualified English accountant, you will be able to benefit from all these deductions in order to reduce the company tax.
• 2. Calculate the deduction applied on the corporate tax: Upper Taxable Benefit Section - earned Benefit
  -> 1.500.000 - 500.000 = 1.000.000 Pounds.
• 3. Multiply the result per annual tax fraction imposed by the Government in order to obtain the total amount of the deduction.
  -> in 2013 - fraction at 3/400: 1.000.000 * 3 / 400 = 7.500 Pounds.
• 4. Subtract this deduction to the corporate tax: 115.000 - 7.500 = 107.500 Pounds as a real corporate tax.
• 5. Calculate the Corporate tax in %: 107.500 / 500.000 = 0,21 i.e. 0,21 * 100 => 21%.

- London is one of the best locations worldwide for international business
- Flexible and inexpensive Social Systems
- Possible anonymity for managers or owners under British law

Community law introduced in the member states of the European Union authorises all the companies to operate in other countries. Your limited company will enable you to trade at a global level at little cost.

Principal characteristics of the UK Limited Company?

-The company name (" corporate name ") must by accepted by the Register of English companies. This acceptance implies a protection of your company name.
-The registered office is in the UK but the meetings can be held wherever you may which
-Corporate purpose is not restrictive and authorizes all legal activities: this is an undeniable advantage compared to the other European countries.
-No requirement of minimum capital, which is subscribed to and released by the shareholders
-The responsibility is limited to the amount of the subscribed shares.
-No minimum duration is set forth the terms and conditions
-One shareholder is sufficient to incorporate the company
-Anonymity is ensured from a legal point of view
-At least one director represents the company, there are 2 types:
"Managing Director" active (who takes care of the day-to-day business) and regular Directors.
-The Secretary is the representative who arranges all formalities with the legal authorities, in particular s/he makes sure that the company's administration runs smoothly
-An auditor is only required in case the income is higher than 1million pounds, which is approximately 1.46 million Euros. He is appointed for one year by the Director

CLICK HERE TO ORDER A UK LTD COMPANY TODAY

________

The information on this website is meant as general information only and some companies may need particular incorporations. Contact us for your specific questions