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HOW TO
SET UP YOUR
BUSINESS IN
LONDON
1
About this guide CONTENTS
This guide is published by London
& Partners, the official international
trade, investment and promotion
agency for London.
Inside you’ll find:
1 Welcome to London
About London & Partners
Why London?
04
Essential steps
2 12
Things you must do when setting up a Forming a UK entity
business in London. How to get started
Choosing a legal entity
Guidance from our Guide to taxation
professional partners VAT
Expert insights on tax, property, Tax incentives
finance, legislation, recruitment, R&D, Intellectual property
intellectual property and more.
3
Living in London
Practical Steps 26
Information on accommodation,
Visas and immigration
schools and getting around the city.
Opening a bank account
Building your team
Setting up your office
“ 4 Launch and grow
Planning for success
How to sell in the UK
48
London & Partners were Promoting your business
Networking
an incredible source
of knowledge and
support for our business
expansion.
5 Enjoy London life
Tips for relocating
Schools
54
Time off and time out
Transport around London
Nick Keating, Director
EMEA, BounceX
2 3
1
WELCOME
TO LONDON
A world-class city in which to live, work
and build a global business.
As CEO of London & Partners, I’d like to thank you for Our vast network of expert and experienced professionals
considering London. can advise and guide you on every aspect of locating and
doing business here.
Whether a growing startup or an established organisation,
you are joining a business ecosystem that’s diverse, From advice on setting up your legal entity and UK taxation,
innovative and full of exceptional talent. to practical guidance on visas, building your team or finding
a well-priced office, this guide is designed to give your
Since 2011, our team has guided more than 2000 companies business a head start in this market.
like yours from more than 67 countries to set up and scale
their businesses. We look forward to supporting you on your journey to set up
and succeed in London.
Laura Citron
CEO
London & Partners
4
ABOUT We have helped
LONDON & 2000+
companies set
up operations
PARTNERS in London
since 2010
London & Partners provides international
businesses with the information they need
to take advantage of London’s unrivalled
opportunities from day one.
Our team in London and around the world would be delighted
to support you. “
Free of charge, bespoke and confidential services include: London & Partners have
• Building the business case for London. been an invaluable source
of support and guidance to
• Sector-specific information, contacts and event calendars.
• Access to high-quality banking, accounting, legal and
immigration advice through our accredited professional ChargePoint in the months
service providers.
• Finding the best property in the right locations. following our establishment
• Advice on relocation and discounted desk hire.
• Help finding the best people from London’s huge pool of
as a UK company and we
talent and skills. will continue to work with
• Connecting companies to London’s business networks.
• Information on living in London and making the most them to help promote our
of the city. offering to new audiences.
Contact us to see how we can help:
Tanya Sinclair
business@londonandpartners.com
business.london
Policy Director UK & Ireland, ChargePoint
6
London is one of the world’s most exciting, dynamic and profitable cities in
which to establish a business.
1 6
EXCEPTIONAL BUSINESS
ENVIRONMENT WORLD-LEADING
The UK ranks consistently in the top 10 in the London is home to 64,000 financial and
world for ease of doing business.1 professional service firms, the highest
concentration of any financial centre in the world.5
2
LOW TAXATION
7
ECONOMY
CONNECTIVITY
Corporation tax at 19% – the lowest in the G20.
With the Eurostar, six international airports and
direct flights to 326 destinations6, London is one
of the world’s best-connected cities
3
EXPERTISE
AND TALENT
10 REASONS The capital has more software developers than
any other European city2 and has four of the 8 TIME ZONE ADVANTAGE
TO SET UP world’s top 40 universities.3
Waking hours overlap with both Asia and North
America, so staying in touch is easy.
IN LONDON 4
RESEARCH
AND DEVELOPMENT
SMEs can receive up to 33% of qualifying expenditure
as tax credits and the Patent Box scheme enables a
9 ACCESS TO FINANCE
Corporation Tax rate of 10% to profits earned from a VC funding into London reached a record $9.7bn
company’s patented inventions. in 2019, and over the last five years the UK has
created more than double the number unicorns
than any other European country 7.
5 TECH CITY
London and the south-east make up the largest
10 QUALITY OF LIFE
tech ecosystem in Europe, with an estimated value A world-class cultural offering with 3,530+
of $47bn.4 pubs, 857 art galleries, 215 museums,
eight Royal Parks and four UNESCO World
1
The World Bank Heritage sites.
2
The State of European Tech
3
QS World University Rankings
4
BDO
5
UK FinTech, State of the Nation
6
fDi Benchmarks
7
Dealroom.co
8 9
WHY
LONDON?
A comment from Stuart Lisle, Partner at BDO
The world is going through a period of immense London is globally recognised as an international hub
change. Developments in technology and of finance, but it caters for all sectors of business.
regulation, a changing relationship with the EU and London has innovative manufacturers, pioneering
the increasing pace of globalisation means that digital startups and forward-thinking retailers. Why?
uncertainty is now the “new normal”. But with Because as well as being a business-friendly city and
uncertainty there is also opportunity. home to world leading entrepreneurs it is also a
fantastic place to live and to study.
London is undoubtedly the best city in the world to
realise that opportunity. London remains London offers one of the most business-friendly fiscal
entrepreneurial, outward looking and full of environments in the world, with the lowest corporate
creativity and possibility. The strength of London is tax rate in the G20, one of the widest tax treaty
its diversity – a diversity of cultures, of ideas and of networks of any country and lowest social security
businesses. Diversity is the lifeblood of the city and costs in western Europe. Add to this its business-
that won’t change. friendly labour laws, the UK will continue to be the one
of the best global locations for setting up for
international businesses.
10 11
INVESTOR
INSIGHTS
Innovation capital Access to talent
“One of the strongest regions and cities on the planet. It’s highly “The access to talent in London is second to none in
attractive and it offers one of the best prospects for business its diversity, meaning we can find and foster the best
development and innovative thinking. London is the showcase for talent whether we’re looking for artists, producers
our work throughout Europe and is paramount in our global strategy.” or creatives.”
Jeff Brennan, Mike McGee,
Chief Privacy Officer, Finsphere Corporation Chief Creative Officer and Co-Founder, Framestore
Business-friendly Fast-track business growth
“London is very easy to work in and is a very business-friendly city. “In terms of regulation, London is a walk in the park.
The process was a lot less complex than we expected. It took just Coming to London was so much easier compared
six months from the initial idea to opening the office.” to other cities. We had a lot of support from London
& Partners – what normally takes months took
Will Fleming, one week.”
President and CEO, MotionPoint
Surobhi Das,
COO, Zomato
Commerce and culture combined
“London has an unbelievable energy, thanks to its incredible mix of
commerce, culture and people. If you want to grow outside the
United States you’ve got to come to London.”
Shimon Bokovza,
Founder and CEO, SushiSamba
Capital, clients and people
“Our decision to expand to London was based on three classic
elements: access to capital, access to clients and access to people.”
Ben Chesser,
CEO, Coniq
12 13
2
FORMING
A UK ENTITY
HOW TO GET STARTED 14
CHOOSING A LEGAL ENTITY 16
GUIDE TO UK TAXATION 18
VAT 20
TAX INCENTIVES 24
INTELLECTUAL PROPERTY 27
14 15
Tim Stovold, Head of Tax at Moore 3. Talk to banks early
Do not underestimate the time it will take to open a bank
Kingston Smith, walks you through account, especially if your business has a complex ownership
five steps for establishing your structure outside the UK and/or the relevant people are
business in the UK. constantly travelling. If you have relationships with banks in
your home country that are represented in the UK, this would
be an easy place to start. Start the process as soon as your
entity is formed.
4. Register your seconded employees
HM Revenue & Customs (HMRC) is the UK tax authority that
collects taxes. Your seconded employees will require either a
UK social security number (known as national insurance
number) or a unique tax reference. They must apply for these
reference numbers as soon as they arrive in the UK to avoid
delays and mistakes later on.
5. Plan ahead
HOW
Establish a calendar of compliance activities for your UK entity
and plan whether to handle them in-house or outsource them.
UK tax has monthly, quarterly and annual obligations to be
met. Evidence that you are tax-compliant is increasingly
TO GET required in tenders and therefore essential for your business
to have the greatest chance of success in the UK.
STARTED
1. Think about your structure
You will probably find that a UK limited company will be the
right entity. Alternatively, if you are intending to carry out more
than one type of activity in the UK or need to ring-fence real
estate or intellectual property from risk-bearing trading
activities, you might want to consider a holding company with
multiple subsidiaries. Another option is registering your
business as a branch, known as a UK establishment.
2. Get registered and insured
When applying for immigration permission, you will need tax
registration and insurance documents to prove you are a
genuine UK business.
i) Register for a payroll scheme so you can make tax
deductions at source from payments you make to
your employees;
ii) Register for value-added tax (VAT) so you can recover
VAT on your expenses and charge VAT (where applicable)
on your sales invoices;
iii) Arrange £5m of employers’ liability insurance so you
are covered for any compensation claims brought
by employees.
16 17
CHOOSING A
LEGAL ENTITY
When establishing a business in London, you need to set up a legal entity.
Andrew Oury, Partner at Oury Clark, takes you through the options.
There are various ways to trade in the UK and the most common types are:
UK limited company
A limited liability company structure owned by shareholders and run by its directors.
Pros Cons
• Quick and inexpensive to set up. • Tax losses stay in the UK.
• Robust limited liability protecting directors • An audit may be required based on the size of the
and shareholders. worldwide group.
• Well recognised and understood. • Information on directors publicly available.
• No need for directors or shareholders to be UK resident. • Requirements to publicly disclose all persons of
• No minimum share capital, and only one director required. significant influence.
• UK Corporation Tax at 19%.
• Access to generous UK R&D incentives.
• Compatible with EIS and SEIS.
• Management and ownership can be separate.
• Can be used for an Innovator visa, Tier 2 visa sponsor
and a Representative of Overseas Business visa.
UK establishment (branch)
A UK establishment is the place of business or branch of an overseas company within the UK. Effectively, it’s a direct extension
of the overseas company, officially registered at Companies House and the tax authorities to trade. Financial reports of the
parent company are likely to be filed in the UK annually.
Limited liability partnership
A partnership but the liability of the members is limited. Pros Cons
• Enables the direct offset of costs in the parent company • Part of the parent without separate limited liability thereby
Pros Cons jurisdiction, and can mean that losses can be claimed in exposing the whole business to the UK risks.
• Easy to set up. • Not as well recognised or understood as a a foreign country. • It is likely the group accounts would need to be filed
• Transparent for tax. limited company. • Part of the parent and therefore could in theory give better publicly with Companies House, even if they are not filed
• Flexible for profit distributions. • Needs at least two people or companies to set one up. credit terms than a newly incorporated company. at home.
• Can be useful for ensuring efficient repatriation of profits. • Members all have to file UK tax returns and pay UK tax on • Compatible with EIS and SEIS if establishment is with • Cannot take advantage of the low UK rate of 19% if
• Can be used for an Innovator visa and a Tier 2 visa sponsor. profits derived from UK activities. the holding company of the overseas company. the parent company jurisdiction has a higher rate of
• Very limited access to R&D incentives. • No audit required. Corporation Tax.
• Cannot be used for a Representative of an Overseas • Can be a Tier 2 visa sponsor and a Representative of • Unlikely to work under an Innovator visa.
Business visa. an Overseas Business visa. • Can be seen as temporary or early stage activities.
• May enable parent company to claim R&D relief in the • Cannot be used for a Representative of an
UK depending on branch activity. Overseas Business visa.
18 19GUIDE TO Which taxes should you be aware of, what rates should you pay and
what are your obligations? James Dolan, Partner at Blick Rothenberg,
UK TAXATION covers the essentials.
Corporation Tax Income Tax National Insurance
Corporation Tax is the tax levied on a Income Tax (and National Insurance as Contributions (NICs)
company’s profits. UK resident compa- outlined below) is generally deducted NICs is the UK’s social security
nies are subject to Corporation Tax in from an employee’s salary on a monthly mechanism.
the United Kingdom on their worldwide basis, through an employer-run system
taxable profits (subject to an option to known as “Pay As You Earn” (PAYE), and Both employers and employees are
exempt profits of non-UK branches). paid monthly to HMRC. subject to NICs as a percentage of the
Furthermore, an overseas entity trading gross salary paid to an employee.
in the UK through a UK branch or
“permanent establishment” is subject to How much?
Corporation Tax on profits relating to For the tax year beginning 6 April 2019, How do I calculate NICs?
UK activities. a UK employee will pay 0%, 20% , 40% As an employer, you must calculate this
or 45% income tax, depending on their amount for both your workforce and the
A UK company needs to register with earnings. The tax is paid on a “slice” company and pay it to HMRC on a
the UK tax authorities, HM Revenue & basis, so individuals can usually receive monthly basis, along with income tax.
Customs (HMRC), and prepare a the benefit of their tax-free personal Current rates for employees are 12% of
Corporation Tax Return and tax compu- allowance before they begin to pay tax their salary between £166 and £962 per
tation each year based on its annual at higher rates. week, and then a further 2% on income
statutory accounts. This is filed with above that limit.
HMRC. Similar obligations apply to UK
branches of foreign companies. Employer responsibilities For employers, the rate is 13.8% of a
As an employer, it’s important that you total salary above £166 per week. This is
How much? calculate income tax liabilities for your a cost that should be factored into
Corporation Tax is paid on the tax UK workforce and any overseas budgeting for UK staff in addition to
adjusted profits the UK business makes. workers you are hosting, taking into basic salary and any benefits provided.
The rate of Corporation Tax in the UK account items such as workplace In certain circumstances, overseas
is 19%. Special rates of Corporation Tax pensions, social security and any nationals may be exempt from paying
can apply to companies in the oil benefits provided. UK National Insurance; however, it’s
and gas, banking/insurance or important to seek advice to ensure the
shipping sectors. correct approach.
How much income tax
will you pay?
Who works it out? Depending on your circumstances, for
UK companies are required to calculate the tax year beginning 6 April 2019 the
their own tax liability and file an annual first £12,500 (personal allowance) of
Corporation Tax return on a self-assess- earnings are tax free. The next £37,500
ment basis. Payment of Corporation Tax is taxed at the basic rate of 20%. The
may also be due on an instalment basis higher rate of 40% applies to taxable
for larger groups. It is important to seek income between £50,001 and £150,000,
advice early on regarding the most after which the additional rate of 45%
appropriate trading model to adopt in applies. Note that if an individual’s
the UK. For example, whether the UK income exceeds £100,000, their
company should be a service provider personal allowance is tapered away
to the overseas parent company or at £1 for each £2 over this limit.
whether the UK company will directly
enter into contracts with customers.
These factors can influence the level of
taxable profits in the UK company.
20 21VALUE
ADDED TAX (VAT)
David McDonnell, Indirect Tax Director at RSM, provides a quick
guide to Value Added Tax (VAT).
What is VAT? Who needs to pay VAT cumulatively exceed the VAT registra-
tion threshold, this may also create a
It’s a consumption tax on goods and and when?
services in the UK and European Union, requirement to register for UK VAT.
The time at which a VAT registration is
with different member states having required will depend on several reasons
different levels of VAT. All companies such as whether the registration is for a Further information
that transact with customers or suppliers UK entity and/or subsidiary or for a You should seek expert advice to make
within the EU will need to understand non-established trader. A non-estab- sure that you are paying the correct rate
these levies, even if they do not have a lished trader can take many forms, eg, a of VAT and if your supplies will be
European presence. business that does not have a place of treated as VAT-taxable supplies of
business in the UK, usually a business goods or services. Furthermore,
that is supplying goods from its local penalties can be levied by HMRC for not
What is the VAT rate in the UK? country to consumers in the UK. registering at the correct time, for
The VAT rate applicable depends upon claiming VAT incorrectly or not account-
the goods or services you supply, If the annual VAT-taxable turnover of ing for VAT correctly on sales.
although certain goods or services are your UK business (via a subsidiary)
exempt from VAT and therefore may not exceeds £85,000 per year, you are
count towards the VAT registration required to register with HMRC and
thresholds. charge your UK customers VAT on all
sales. The tax should then be paid to
The standard rate in the UK is currently the UK tax authorities (Her Majesty’s
20% and is applied to most taxable Revenue & Customs or HMRC) on a
goods or services. A reduced rate (5%) periodic basis, usually each quarter.
or a rate of 0% can apply. You may also For a non-established trader selling
be charged UK VAT on goods and goods to UK customers, the threshold is
services that are supplied to you, but if zero; therefore, there will be a mandato-
you are a UK VAT registered business ry requirement to register for UK VAT
you can recover these payments by before the first sale takes place.
paying (or reclaiming) the net amount If a UK business receives certain
via your next VAT return. services from non-UK suppliers that
22 23TAX INCENTIVES “
Eyad Hamouieh, Innovation Incentives Tax Partner at BDO, explains the There’s a misconception that
range of options available to support businesses looking to invest in R&D only applies to those that
innovation within the UK. wear “white-coats” or businesses
engaged in pharmaceuticals,
Research and development (R&D) tax credits Creative sector tax reliefs technology or manufacturing.
There is a lot of terminology around R&D tax relief, but don’t The creative industry plays an increasingly significant role in
be put off. the UK economy. The government has introduced eight In reality, R&D tax relief looks to
targeted tax credits designed to encourage development and
R&D can be costly, but the UK has some of the most effective production activities in the UK. These can result in a cash incentivise the improvement of
products and processes as much
tax reliefs available in the form of R&D tax credits. There are refund of up to 20% of eligible expenditure.
two R&D tax credit schemes in the UK:
• SME scheme: delivers between 26% to 33% of qualifying
The tax credits are:
as blue sky thinking – and doesn’t
expenditure as refundable tax credits
• Large company scheme (RDEC): delivers a 12% boost to
•
•
Film Tax Relief (FTR)
Animation Tax Relief (ATR)
only apply to projects that are
earnings before tax, in the form of a taxable above the line • High-end Television Tax Relief (HTR) completed successfully.
tax credit. This equates to a circa 10% net tax benefit, which • Children’s Television Tax Relief (CTR)
is repayable in cash where a company is loss-making. • Video Games Tax Relief (VGTR)
• Theatre Tax Relief (TTR)
Qualifying for these schemes can be challenging, especially if • Orchestra Tax Relief (OTR)
your group structure is complex. However, we can help you • Museums and Galleries Exhibition Tax Relief (MGETR).
navigate through this – our expertise in the legislation,
underlying guidance and HMRC interpretation and how it
applies to companies of all sizes is invaluable. Employee share plans and incentives
Retaining and incentivising your people is an important
There’s a misconception that R&D only applies to those that objective for most employers and companies. Structuring your
wear “white-coats” or businesses engaged in pharmaceuti- cash and share-based incentive arrangements to achieve that
cals, technology or manufacturing. goal as effectively and efficiently as possible will give you a
competitive advantage.
In reality, R&D tax relief looks to incentivise the improvement of
products and processes as much as blue sky thinking – and How you approach this challenge will vary depending on your
doesn’t only apply to projects that are completed successfully. business’s current stage of development and strategy for
growth – so it’s vital to take advice on the most appropriate
scheme for your business.
The Patent Box
The Patent Box scheme is available to companies earning
profits from goods and/or services that have been patented in
the UK or with the European Patent Office. It takes the form of
a lower effective tax rate at 10% of the relevant profits.
The rules may seem complicated at first, however the
calculation need not be, particularly with a little bit of upfront
planning and with the support of expert advisers.
24 25A QUICK GUIDE
INTELLECTUAL PROPERTY
TO PATENT BOX RIGHTS IN THE UK
A scheme allowing companies to apply a 10% rate of
Corporation Tax to profits attributable to qualifying patents, Mark Owen, Partner, IP and Media at Taylor Wessing, provides a quick
whether realised as royalties or embedded in the sale essential guide to intellectual property rights in the UK.
price of products.
Who?
A broad range of sectors, including electronics, defence,
pharmaceuticals, life sciences and manufacturing can benefit. There are several forms of intellectual property rights (IPRs), which can protect a wide variety of different creations including
as brand names, logos, inventions, designs, text or images. The main forms of IPRs in the UK are:
Why?
To incentivise companies to retain and commercialise Form of protection Examples of what can be protected Duration
existing patents and to develop new, innovative patented
products. Registered Your brand names, business names, 10 years, but can be renewed
trademarks* domain names, social media handles, potentially indefinitely.
And not forgetting… logo and product names (but also,
The regime also applies to some other IP rights such as plant potentially packaging, colours, shapes
variety rights, regulatory exclusivity rights and supplementary and the like).
protection certificates (SPCs).
Rights in passing-off Your brand names, domain names, social Potentially indefinitely.
Visit hmrc.gov.uk to find out more.
media handles, goodwill and reputation,
including packaging.
Registered* and Packaging, the whole or part of a Generally 3 to 25 years depending
unregistered designs product, 3D shape or configuration, on which form of design.
product shapes, graphic designs and
surface decoration.
Copyright and Investment in databases, text (such Generally 70 years from the
database rights as product descriptions), images, death of the creator.
pictures and drawings (such as design
documents, marketing materials and
product packaging), films, music and
software, consumer and sales details.
Patents* Inventions. Ones which are essentially a 20 years.
business model are harder to protect.
Confidential Any commercially sensitive information Potentially indefinitely.
information such as customer or supplier
information, know-how, manufacturing
processes and product launches.
*Registration is required for a right to arise.
26 273
PRACTICAL
STEPS
VISAS AND IMMIGRATION 32
OPENING A BANK ACCOUNT 35
RECRUITING AND RETAINING TALENT 36
SETTING UP YOUR OFFICE 41
28 29GUIDE TO
UK VISAS
Tom Redfern from Redfern Legal explains how to identify the right UK
visa for your type of business and what you want to achieve.
Consider the options early on to avoid If you’re a more experienced entrepre-
surprises and to ensure choices down neur with an innovative, viable, scalable
the line, such as residence, are not business idea and have access to at least
ruled out. £50,000, try the Innovator visa route.
The Tier 1 Global Talent visa (previously
Leaving the EU
the Exceptional Talent visa) is for
Once the UK leaves the transition
people with the required talent level and
period as a result of its departure from
is also one of the self-employed routes.
the EU, it will automatically leave the
European Economic Area (EEA). Until
For hiring outside the EEA, make sure
this happens (currently scheduled for 31
your UK company has a sponsor licence.
December 2020), the rights of EEA
These applications fall under Tier 2, an
nationals remain unchanged. There is a
employed route. Your business will need
pre-settled and settled registration
to show it has a UK bank account, and
scheme in place for EU nationals to
due to money laundering checks expect a
preserve their residence status in the
four to eight-week preparation time for
UK once the transition period ends. It’s
your application.
simple and free of charge.
The sponsor licence comes with different
Visa types sub-categories – the ones commonly
A standard visitor visa allows you to used when hiring non-EEA employees are
come here for a business activity, but it the Tier 2 General and Tier 2 Intra-Com-
does not allow you to work. There can pany Transfer (ICT) categories.
be a grey area between the two.
If you are a company based overseas Tier 2 visa applications include an NHS
with no UK presence, you can expand surcharge and a skills charge. Contribu-
your business here by sending a senior tions are also payable by the employer.
employee to establish a registered However, secondees from outside of the
branch or wholly owned subsidiary of UK may be eligible for an exemption of
the overseas business through the Sole between one and five years of National
Representative visa. Insurance contributions. Application for a
certificate of coverage may be needed
If you’re an early-stage high potential from the home country, so leave plenty of
entrepreneur who is starting a business time for this.
in the UK for the first time, consider the
Start-up visa.
30 31DECISION MAKER: WHICH VISA?
Anita de Atouguia, Partner and Head of Business Immigration at Doyle Clayton,
runs through the options
Visa type Ideal for… Applicants must… Resulting in… Don’t forget… How long to organise?
Sole representative visa Established senior employees who are not majority If using your own money which is transferrable to the UK to invest, you must show: A 3-year visa, extendable by a further 2 You must meet the English language requirement and work full Standard processing time is 2 to 4 weeks from
shareholders, to set up a UK branch or a wholly-owned - how much money you have and where it’s being held; years. time for that employer only in the UK (personal and business travel is the date of the application.
subsidiary for an overseas parent company whose - where the money came from if held for less than 2 consecutive years prior to Permanent residency after permitted). Use the priority service option (if available) and
headquarters and principal place of business is outside application; and 5 years’ continuous stay. A business plan for the UK expansion is required. receive an outcome within 3 to 5 working days.
the UK.
- supply evidence of the source of funds.
If using money that is owned either jointly with, or solely by, your husband, wife, civil
partner, unmarried or same-sex partner, you must:
- have unrestricted right to transfer and dispose of the money;
- have permission from your husband, wife, civil partner, unmarried or same-sex partner
to have control of this money in the UK; and
- supply evidence of your relationship plus permission to use the joint funds given.
Tier 2 visas for • Sponsored visa for skilled workers. The business must be established and
sponsored workers • You’ll need a sponsorship licence from UK Visa & Immigration. trading first.
(overview) • There are minimum skill and salary levels required for all Tier 2 visas . Licence should be granted (if the application is
• You may need to undertake a Resident Labour Market Test (RLMT) for Tier 2 (General) visas. successful) within 2 to 6 weeks from the date
the application is made, but may take longer if
• A cooling-off period of 12 months may apply at the end of a Tier 2 visa or UK assignment, preventing the migrant from returning to the UK as a Tier the business receives a pre-licence audit from
2 migrant for 12 months (exceptions apply for high earners and for assignments that are less than 3 months). the UK Home Office. Once the sponsor licence
• In addition to government application fees, applicants may also have to pay a mandatory upfront contribution to the National Health Service, which has been granted, the migrant’s visa must be
is currently set at £400 per person, per year of the visa. applied for. So, total timings are likely to be 3
• Sponsors must also pay an “Immigration Skills Charge” at the rate of £1,000 per year of the Tier 2 Visa (reduced to £364 for small and charitable to 6 months.
sponsors). Certain exemptions apply, such as for the hire of UK graduates switching into Tier 2.
Tier 2 Intra Company (Transferring skilled overseas-based non-EU employees The migrant must be paid at least £41,500 gross per year for the long-term staff sub- For the long-term staff sub-category, visa For the long-term staff sub-category, after a maximum of 5 years (or 9 years if Standard processing time is 2 to 4 weeks from
Transfers (ICT): from overseas group companies to your UK operation.) category (£23,000 gross per year for Graduate Trainee), or the market rate for the role of up to 5 years in total (or 9 years if annual annual salary package is at least £120,000), the employee must leave the UK the date of the application (but a sponsor licence
- Long-term staff The migrant must have been employed for 12 months in the if higher (as dictated by the relevant Code of Practice for Skilled Workers). gross salary package is at least £120,000). as a cooling-off (lock-out) period of 12 months will apply. The same applies for must be in place first).
- Graduate trainee overseas company to be eligible for a long-term staff visa, Maximum granted for a graduate trainee is graduate trainees unless returning under the Tier 2 ICT long-term staff route. Use the priority service option (if available) and
unless earn at least £73,900 gross per year. 12 months. There is no English language requirement. receive an outcome within 3 to 5 working days.
The migrant must have been employed for 3 months to be NB: ICT route does not lead to permanent 24-hour processing is available in certain limited
eligible for a Graduate Trainee visa. residency. countries, eg in China and the USA.
Tier 2 General Usually for hiring of skilled non-EU staff from outside The migrant must be paid a minimum gross salary package of £30,000 gross per year Permission capped at 6 years (3- years visa The migrant must meet the English language requirement. Standard processing time is 2 to 4 weeks from
your “employing group” (eg new hires from abroad or (experienced workers) or £20,800 gross per year (new entrants) or the market rate for initially with a 3-year extension). Applicants must not own more than 10% of the business (unless gross annual the date of the application (but a sponsor licence
recruits from other UK businesses currently on Tier 2 visas the role, if higher (as dictated by the relevant Code of Practice for Skilled Workers). Leads to permanent residency after 5 years salary package is at least £159,600). must be in place first).
with another sponsor), but can also use for current staff if certain conditions are met. The migrant’s UK company may need to advertise the role for at least 28 days Use the priority service option (if available) and
relocating permanently to the UK. and the migrant may need to apply for permission to recruit against the UK’s receive an outcome within 3 to 5 working days.
immigration cap (currently set at 20,700 per year), unless an exemption applies, 24-hour processing is available in certain limited
before offering it to a non-EU national. countries, eg China and the USA.
RLMT must be carried out unless it is a shortage occupation, or the gross
annual salary package is £159,600 per year or more.
12-month cooling off period applies unless returning as a high earner with
annual gross salary package of at least £159,600.
Start-up visa (formerly Early-stage, high potential entrepreneurs starting a You do not need any funds to invest in the business at this stage and must not have A 2-year visa that cannot be extended You must meet the English language requirement, as well as providing Up to 3 months, depending on timing of the
known as Tier 1 business in the UK for the first time, which has been previously set up a business in the UK. further in this category. evidence of prescribed personal maintenance funds endorsement.
Graduate Entrepreneur endorsed by an approved body. Must propose a business idea that meets the requirements of innovation, viability and Not able to obtain permanent residency in for a set period. However, from the date of submission of the
visa) ( Can have an entrepreneurial team, but must have individual scalability and obtain an endorsement letter from an approved endorsement body. the UK on this visa. You should spend the majority of your working time in the UK to develop your visa application, it usually takes around 2 to 4
endorsement. Must be able to show business idea is: business venture(s), but will not be restricted from undertaking work in another weeks to be processed.
• A new idea – cannot join/invest in business already operating in the UK; job. Use the priority service option (if available) and
• Viable, with growth potential; and You can progress to an Innovator visa after two years. receive an outcome within 3 to 5 working days.
• Innovative, must be an original business idea unique to anything else in the market
Innovator visa (formerly Experienced business people seeking to set up Must have a minimum of £50,000 funding available to invest in a new business, and A 3-year visa. You must meet the English language requirement as well as prove prescribed Up to 3 months depending on timing of the
known as Tier 1 or run a business or business idea in the UK, which has obtain an endorsement letter from an approved endorsement body. Permanent residency after personal maintenance funds for a set period. endorsement.
Entrepreneur visa) been endorsed by an approved body. No funds required if the business is already established and has been endorsed for a 3 years’ continuous stay. You should spend most of your working time in the UK to develop your However, from the date of submission of the
Can have a team, but investment funds cannot previous visa. business venture(s) and will be restricted from undertaking employment for visa application, it usually takes around 2 to 4
be shared. Must be able to show business idea is: another business. weeks to be processed.
• A new idea – cannot join/invest in business already operating in the UK; and An endorsement is required at every stage (initial application, extension and Use the priority service option (if available) and
• Viable, with growth potential settlement). receive an outcome within 3 to 5 working days.
Tier 1 Exceptional A recognised leader (exceptional talent) or an emerging Must obtain an endorsement from a designated competent body. The designated A 3-year visa, extendable by a further 2 You must meet the English Language requirement. Up to 3 months, depending on timing of the
Talent visa leader (exceptional promise) in a qualifying field competent bodies are: years. There are only 2,000 places per year available under this visa category. endorsement.
(soon to be the Tier 1 (science and medicine; engineering; humanities; digital The Royal Society (for science and medicine); You may work for an employer, work as a director or be self-employed. However, from the date of submission of the
Global Talent visa – technology; arts and culture which includes fashion, The Royal Academy of Engineering (for engineering); Permanent residency after 3 years’ visa application, it usually takes around 2 to 4
further information to architecture, film and television). continuous stay under exceptional talent weeks to be processed.
follow ) The British Academy (for humanities);
Tech Nation (for digital technology); route, or after 5 years under exceptional Use the priority service option (if available) and
promise route. receive an outcome within 3 to 5 working days.
Arts Council England, (for arts and culture which includes fashion, architecture, film
and television).
Tier 1 Investor visa Individuals with at least £2m in cash funds available. Have access to at least £2m to invest in UK-registered companies, excluding property A 3 years and 4 months visa will be granted, Must have a UK bank account opened for the purpose of investment and the Standard processing time is 2 to 8 weeks from
development or property management businesses. extendable by a further 2 years. Permanent £2m must be held in cash funds, either in a UK bank account or be transferrable the date of the application.
residency after 5 years’ continuous stay. to the UK. Use the priority service option (if available) and
Permanent residency can be expedited to 2 Must invest the £2m by way of share capital or loan capital in active and trading receive an outcome within 3 to 5 working days.
years of continuous stay if you invest £10m UK-registered companies within 3 months of entry of the Tier 1 Investor visa.
or 3 years if you investment £5m. No restrictions regarding activities in the UK and there is no English language
requirement.
*Please note: visa timings fluctuate, and the UK’s immigration rules and salary thresholds often change at short notice. In addition, this table summarises some key issues only and therefore should be used as a guide and not be
relied upon to provide legal advice.
32 33THE SOLE REPRESENTATIVE VISA: CASE STUDY Having ensured TSC was eligible to set
up in the UK, and Mr. JM qualified to
• A full description of TSC’s financial
activities, including details of assets,
that his “Representative of an overseas
business” visa application had been
represent their organisation in the UK, accounts and share distribution; approved along with those of his three
Smith Stone Walters set about assisting • A letter from TSC confirming their dependent family members.
Smith Stone Walters secured visa approval under this category within eight in the preparation and submission of the intention to establish a wholly- Mr. JM had been granted permission to
days for a Chinese business touching down in the UK for the first time. UK visa application. owned subsidiary or register a enter the UK for an initial three-year
branch in the UK in the same period in order to perform the specific
For convenience, Mr. JM’s biometric business activity as their Chinese task of setting up and running the UK
appointment was arranged at the based operation; branch or wholly-owned subsidiary of
Fuzhou Visa Application Centre, even • A detailed business plan for the his employer, TSC.
though the completed application would proposed UK office; and
be assessed by the British Consulate • A job description, employment and Should Mr. JM and his family decide to
General in Guangzhou. salary details in respect of Mr. JM’s remain in the UK long-term and extend
intended UK role. their existing visas, they would be
industry experience and knowledge; In order to make this application a eligible to secure UK permanent
• Must meet the English language success, it was necessary to prepare a Success! Visa approval… residence (“settlement”) after five years.
requirement; range of supporting documents for Just eight working days after Mr. JM
• Must be in receipt of a salary high submission at his appointment. These attended his biometric appointment in
enough to support himself and any included: Fuzhou, he received formal confirmation
family members he wishes to take
with him to the UK, without needing
to turn to public funds for help;
• Must intend to work only as a
full-time representative of TSC in
China and not to undertake any
other employment upon arrival in
the UK; and
• Must intend to establish TSC’s first
commercial presence in the UK, eg,
a registered branch or a wholly-
owned subsidiary.
As more overseas businesses look to
Our client is a technology company family as TSC’s sole UK representative,
establish a UK hub, this UK visa route is
based in China with its head office in Smith Stone Walters were engaged to
becoming increasingly popular.
Xiamen. For the purposes of this article, assist in the filing of the UK visa
Companies wishing to take advantage
they will be known as TSC. application.
of this visa category, such as TSC, also
have a responsibility to fulfil certain
In order to expand their business into Smith Stone Walters directed TSC and
conditions. Smith Stone Walters
the European market, TSC handed an Mr. JM on the rules surrounding the Sole
therefore ensured TSC understood the
existing 27-year-old Chinese employee representative visa and the
following:
(‘Mr. JM’) the responsibility of setting up requirements Mr. JM needed to fulfil in
The parent company – TSC …
a wholly-owned subsidiary in the UK on order to apply for this type of visa. Our
• Must have satisfactory motivation
behalf of their Xiamen based operation. advice included the following:
to establish a UK presence;
• Must maintain its headquarters and
As General Manager, Mr. JM held a • Must have already been recruited
principal place of business outside
senior position within the organisation’s and employed outside the UK by
the UK;
headquarters in China but was not a TSC whose headquarters and
• Must have no other branch,
shareholder within TSC. Alongside his principal place of business are
subsidiary or representative already
existing knowledge of TSC’s operations, outside the UK, prior to the
in the UK; and
Mr. JM also held relative sector-based submission of the visa application;
• Should intend to operate the UK
experience and possessed a strong • Must hold a senior position within
branch or subsidiary in the same
command of the English language. TSC (but not as a majority
type of business activity as its
shareholder) and have full authority
overseas business.
Having accepted the company’s offer to to make decisions on its behalf;
move to the United Kingdom with his • Must have extensive and relative
34 35OPENING A
BANK ACCOUNT
Charles O’Neill, Head of Inward Investment at Metro Bank, tells
you what you’ll need to bring along if you’ve set up a company
or limited liability partnership (LLP).
Your business plan, key people, Identification and verification:
markets and customers: • T
he bank needs to verify the identities
• What the firm will do, projected sales, and addresses of the key individuals.
income and expenditure. • U
sually we need a passport or driving
• Who are the key suppliers and licence for ID plus a recent bank
customers. statement or utility bill for the address.
• Everything a bank needs to know to
understand the account movements Bank statements:
and the services you need. Especially • If your company is a newly registered
with regard to industries and countries subsidiary of an existing company, you
to avoid payment being classed as will need to provide 6 months
unusual and so delayed or denied. statements for your parent company.
• D epending on where the initial
Company structure chart: funds come from and how much is
• Detailing ownership and respective invested we may also need bank
percentage shares held down to an statements from the beneficial owners
individual level. as well as an explanation of their
• You will be asked for underlying source of wealth.
documentation unless it is available
on a public register. This might include
things like the certificate of
incorporation, share registers, share
certificates, partnership agreements
and trust agreements.
37At a glance
RECRUITING AND RETAINING TALENT
Harry Martin, Manager of the European Division at Centre People
Appointments, shares the key areas to consider when recruiting in the UK.
UK legal requirements Interviews: providing equal The UK recruitment process
opportunities
RECRUITING
• Maximum 48-hour working week, but • Prepare details and salary/package
individuals can opt-out The UK has strict discrimination laws • Take the job to market
• Normal working day considered 9am which will dictate what you can and • Consider CVs and shortlist
to 5pm, with one hour for lunch can’t ask when interviewing candidates. • Interview (ideally 2 to 3 stages max)
AND • Flexible working is becoming more
common in UK working culture – this
might be worth considering for
attracting top candidates.
Avoid questions relating to:
• Gender
• Verbal offer
• Written offer (ideally within 24 hours)
and contract
RETAINING
• Age
• Minimum 20 days’ holiday and 8 • “Native” or “mother tongue” speakers Ideally aim to have the process last no
national holidays (most companies • Nationality/ethnicity longer than 2 to 3 weeks.
offer more to stay competitive and • Others – religion, sexuality, a parent/
TALENT How recruitment agencies
attractive to employees) planning a family, etc.
• Automatic enrolment pension can help
contributions: employees have the Knowing what you want when • Full end-to-end support
option to opt-in or opt-out Minimum
starting your talent search • Sample job descriptions,
pension contributions are: 3% from salary guidance
London is a very competitive talent
employer/5% from employee • Broad advertising and active search
market, so it’s important to set out clear
objectives for what you want when • Arrange all interviews
starting your search: • Sample offer letters
Right to work in the UK
All employers in the UK have a responsi-
bility to prevent illegal working. Identify what staff are needed
•
How many and when you need
To do this, the employer should conduct them by?
a simple right to work check before
employing someone. What order to hire staff
•
• Employer must see the applicant’s Start with senior commercial staff,
original documents then add support staff?
• Employer must check that the
documents are valid with the appli- Prepare full job descriptions
•
cant present Staff will want written job details in
• Employer must make and keep full, without this the process and
copies of the documents and record organisation can come across as
the date you made the check unprepared and unprofessional.
Salary and package
•
Are you offering enough to secure
the right talent?
Recruitment agencies can help with
salary benchmarking to help you get
the salary range right.
Consider additional benefits outside
of base salary – these are a massive
drawcard.
38 39Quick guide to UK EMPLOYMENT LAW
EMPLOYMENT TAX AND NATIONAL INSURANCE David Greenhalgh, Employment Partner at Joelson,
CONTRIBUTIONS (“NIC”) RESPONSIBILITIES takes you through the key things to consider when
building your team in London.
As an employer you have several tax and NIC obligations relating to your
workforce. Lee Knight, Employer Solutions Director at RSM, highlights the
main obligations new employers to the UK should be aware of. There are three main categories of
employment status when hiring in the
UK: employees, workers and self-
employed consultants (as individuals or
through a service company).
The basics Non-cash benefits and If HMRC contends that self-employed
Employers in the UK are required to employee expenses individuals should have been treated as
Employees and workers have statutory
register as an employer with HM As an employer, you are also required employees, it can recover the underpaid
tax and NIC which should have been rights and protection whereas most
Revenue & Customs (HMRC), to pay to report certain non-cash benefits
paid through PAYE from you together self-employed individuals do not. The
employees in accordance with mini- provided to employees on forms P11D
with interest charges and penalties. employment status of the individual you
mum wage legislation and to deduct by 6 July of the following tax year. It is,
Make sure the status of self-employed are hiring will depend on their role. We
income tax and employees’ NIC from however, also possible to “payroll”
individuals is properly considered from can help you determine the correct
earnings through the Pay As You Earn certain benefits and/or deal with
the outset. employment status in each case.
(PAYE) system. Employer’s NIC is due certain benefits via a PAYE
on employees’ earnings via this Settlement Agreement.
Businesses can also have obligations in For both employees and workers, an
system too.
respect of other off-payroll workers who employer has to pay social security
An exemption for employee businesses
are not engaged directly by them as contributions to the UK Government.
Under PAYE you will need to complete expenses that are not reportable to
individuals. In particular, the UK’s “IR35” Employees have various protections
tasks by statutory deadlines each tax HMRC and liable to tax or NIC exists,
rules, which apply when a worker and entitlements including paid holiday
month. For example, information must where conditions are met.
personally provides their services via and notice, minimum levels of pay and a
be reported to HMRC online under Real
their own intermediary (such as a limit on their working time, unless the
Time Information when employees are
paid; and tax and NIC must be paid to
Do not get caught out on personal service company) can, with employee has explicitly opted out. They
HMRC by the 22nd of the month self-employed individuals effect from 6 April 2020, place complex also get sick pay and a pension and
following payment. It’s important you and off-payroll workers obligations on the end-user of such a have family related leave and pay and clients and/or interfering with There is no such concept as
seek professional advice to find out If you engage self-employed individuals, worker’s services, and anyone else entitlements. your supply chain for a period of time “employment at will” in the UK,
whether this also applies to your you are required to check that their involved in the supply of such a worker. post termination. meaning that statutory minimum notice
periods apply to any termination of
international employees and directors contractual and working arrangements This can include the obligation to Recruiting Onboarding
working in the UK. support self-employed status by operate PAYE. employment. Contractual notice
During the recruitment process, you During the first two years of
applying certain tests. periods, on the other hand, usually vary
need to avoid using any criteria which employment it is possible to dismiss
Employers with a total pay bill in excess from one month for junior employees
could be considered discriminatory. unwanted employees, subject to special
of £3m each year are also required to to anywhere between three and six
In order to maximise your legal protections which apply to in relation to
pay an Apprenticeship Levy through the months for senior level hires. We
protection, it is important to get your discrimination and whistleblowing. After
PAYE system. recommend including a probation
staff signed up to employment contracts two years’ employment, you will need a
period in your employment contracts,
drafted by specialist employment solid legal ground to dismiss (such as
during which a shorter notice period
lawyers. Contracts need to be detailed redundancy or capability) and you must
will apply.
and should cover areas such as follow a proper process.
confidential information, intellectual
The above is only a brief summary of
property and post termination You must ensure successful candidates
employment law in the UK and should
restrictions. Carefully drafted post- have the right to work in the UK. There
not be relied on as legal advice.
termination covenants can protect your are a range of visas that may be
Please contact David Greenhalgh for
business against your former employee available and a specialise immigration
more information: david@joelsonlaw.com
joining a competitor, poaching your staff lawyer will be able to advise you.
40 41HOW TO ATTRACT AND RETAIN TALENT SETTING UP
James Webb, Managing Director at Propel, draws on recent research
on talent in the workplace. YOUR OFFICE
Whether growing your company from a people The importance of diversity and inclusion Clive Buckley, Founding Partner at First Office Hub, takes you through your
perspective, or in a new ecosystem or country – talent is
crucial. Previous surveys conducted at Propel have
Propel published the second book in its Digital Nation options when choosing a serviced office space.
Series: Funding the Digital Economy to add to our
shown that at any point in a company, 63% of its staff research and thought leadership on working culture,
might consider a new role within a year. So, what can diversity and inclusion (D&I). Across 18 Female Senior VC
The “perfect” office is different for but help is at hand,’’ explains King’s Cross
companies do to ensure they hire the right people and, interviewees, what came up time and time again was the
everyone. A startup might benefit from Clive Buckley, Founding Partner London’s largest transport hub has
once in place, keep them motivated, valued and happy increased importance of D&I, both internally and in the
being in a collaborative co-working at First Office Hub. undergone extensive regeneration over
as well as profitable? companies that they partner with and invest in.
environment, whereas a well-established the past few years and is now home to
brand may feel more at home in their Using a free flexible workspace broker a selection of workspaces, as well as
Propel’s 2019 publication: Digital Nation: Propel’s Talent The conversation is now moving to what needs to
own space. The good news is, with can simplify the process of finding an Google’s upcoming 1 million sq ft
Manifesto emerged from speaking to 13 business happen next; how can companies hire, promote and
14 million sq ft of flexible workspace in office. Brokers know the market inside office space.
owners, founders and entrepreneurs as well as 200 retain those with diverse backgrounds and the
London and counting, there’s a match out, can match you with options that
professionals working in the digital economy. importance this carries.
out there for every business. meet all your requirements and may Westminster
even be able to negotiate the best terms Victoria in Westminster has also
The importance of culture Which office type should on your behalf. been regenerated to accommodate
Two thirds (67%) of respondents said they had declined I choose? businesses moving to the area. Desk
a job offer due to the culture and values of the All flexible workspaces have one thing in Step 1: browse locations prices are cheaper than those in the
prospective employer. The biggest reason for leaving common: licence agreements. Unlike a London is a diverse ecosystem that neighbouring West End and it’s also
their last company was people/culture/working lease, a licence agreement allows you to caters to businesses across all sectors, a key transport hub.
environment (44%), with the opportunity for a new work rent an office for shorter periods of time and certain areas are better suited to 2. View options
challenge (34%) and a lack of career progression or and there’s room for negotiation. Also, some than others. For instance, financial Once you’ve shortlisted your favourite
opportunity (28%) following close behind. Employees monthly all-inclusive billing makes it services companies often opt for an offices and discussed your requirements
who say they have a great place to work were four easier to keep track of cash flow. office in the City of London, whereas in more detail, your broker will arrange
times more likely to say they were willing to give extra creative enterprises usually prefer places for you to view them at a time that suits
to get the job done, according to research by Fortune Co-working like Shoreditch and Hoxton. you. You can squeeze a visit in between
magazine and Great Place to Work. If you’re a solopreneur or manage a
your meetings or make the best of a day
small team, you might decide to rent Key locations include: by viewing several options at once. We
The importance of flexible working desks in a co-working space. Many run West End recommend you view 3 to 5 options.
Flexible working and respecting your employees are events for members, enabling you to London’s prestigious West End covers
essential drivers in attracting and retaining talent. network and grow. Soho, Mayfair, Fitzrovia and Covent 3. Sign and move
People will turn down higher salaries for flexible Garden. As well as high-end retail Most flexible workspaces are pre-fur-
working and benefits that tune in to their needs, like Private office brands and galleries, the area is home to nished and connected, so you can move
childcare, sabbaticals and medical insurance benefits. If you want your own space, you can rent a number of established businesses in in at short notice and start working
Flexible working practices have increased up to 57% a private office in a flexible workspace. finance and media. straight away. You can usually sign for
from 49% in 2017 and 36% in 2016 and have become anywhere between one to 36 months.
such a hot topic with potential and existing employees,
Shared amenities mean you’ll still pay a City of London
competitive price and get to meet other Prices quoted exclude VAT, which is 20
it should be at the forefront of every business founder/ Bank, Moorgate and Liverpool Street are
businesses. per cent in the UK. You should expect to
owner/CEO’s mind. all part of London’s financial epicentre. As
pay a two month deposit when you sign,
Managed office such, it attracts banks, brokers, invest-
however, some operators charge less or
Designed with medium to large busi- ment managers, private equity firms and
no deposit.
nesses in mind, a managed solution other businesses in the finance sector.
provides a self-contained, customisable Tech City Visit First Office Hub’s website to
workspace solution on flexible contrac- As the name suggests, this part of browse offices across London.
tual terms. London is popular with tech startups and
How to find an office digital creatives. Old Street (Silicon
“With so many office options out there, it Roundabout), Shoreditch and Hoxton all
can be difficult to know where to look, cater to new businesses looking to
attract talent.
42 43You can also read
