From choosing your business structure to Companies House registration and HMRC registration, careful planning helps avoid compliance pitfalls.
In this guide, our team of experts outline the essential first steps to getting started in the UK.
1. Choose the right business structure
Most overseas companies choose one of three structures:
- Limited company – Provides limited liability and suits long-term operations.
- UK branch – Simpler setup, but your parent company remains legally responsible.
- LLP (Limited Liability Partnership) – Offers flexibility in profit-sharing and management.
Each option affects UK tax for overseas companies, liability, and reporting. We can provide advice and guidance before you register a company in the UK from abroad.
Paul Woodward, Director of Corporate Tax at Rouse comments: “Selecting the wrong structure can have long-term implications. Think about your goals – whether you want a local presence, full control or simply to test the UK market first.”
2. Forming your UK company
To form a UK limited company, you must register with Companies House. You’ll need:
- A unique company name that follows Companies House rules
- A UK registered office address (we can provide this as part of our registered office service)
- At least one director and one shareholder
- Details of the company’s People with Significant Control (PSCs) and directors — now verified through ID checks under new UK requirements
Martin Brooks, Company Secretary at Rouse comments: “Many international owners underestimate how precise UK company law can be. A missed filing, or even a wrongly completed director register, can lead to Companies House penalties or affect future funding. Getting governance right from the start ensures compliance and protects your business.”
Challenges for UK Companies with Non-UK Directors and No UK Establishment
It is worth noting that UK-incorporated companies with only non-UK directors and no UK establishment—meaning no fixed place of business in the UK, even if legally incorporated there—can face a range of practical and tax challenges.
While they are legally UK companies, they may be treated as non-established for VAT and tax purposes because HMRC focuses on where the company is actually managed and operates, not just where it is incorporated. This can make it difficult to open UK bank accounts and can create uncertainty in VAT treatment—UK service providers may not charge UK VAT if the company is considered non-established, even though it is a UK company on paper.
The core issue is that HMRC and banks look at the company’s real presence and management: if all directors and operations are abroad, a UK registration alone does not create a fixed establishment. This can lead to unexpected VAT, banking, and corporate tax complications, including the need to register as a non-established taxable person (NETP) for certain supplies, reverse charge VAT obligations, and potential scrutiny of corporate tax residency.
Nicola Gladwell, VAT Consultant at Rouse comments: “Even though a company is incorporated in the UK, HMRC will assess its actual presence and management. Without a UK establishment, VAT and banking issues can arise that many directors don’t anticipate.”
To navigate these complexities and ensure compliance, it is strongly recommended to work with experienced international accountants and tax advisors – our team can help guide your business operations effectively in the UK.
3. Registering for tax with HMRC
When your company is formed, you will need to register with HMRC for Corporation Tax within 3 months of starting to do business (buying, selling, employing income or earning income).
To register with HMRC you will need:
Company details
- Company name and registration number (CRN) from Companies House.
- Company’s registered office address.
Company activity details
- Nature of your business (brief description of what your company does).
- Accounting period start and end dates (usually your company’s financial year).
UTR (Unique Taxpayer Reference)
- HMRC will send a UTR to your company’s registered office after incorporation.
- If you haven’t received it, you may need to request one.
Director(s) details
- Name, date of birth, and personal tax information for company directors.
Contact information
- Email or phone number for correspondence with HMRC.
Separately, VAT registration is required if your annual turnover exceeds £90,000 (2025–26 threshold). This is also optional for smaller companies wanting to reclaim VAT on business expenses. VAT registration comes with additional responsibilities such as quarterly VAT returns
Our team helps ensure your business complies with UK tax regulations from day one.
Nicola Gladwell, VAT Consultant at Rouse comments: “VAT is one of the most common areas where new companies make mistakes. Getting it right early prevents fines and ensures smooth operations.”
4. Open a UK business bank account
While not legally required, opening a UK bank account (or having access to one) can make trading in the UK easier:
- Credibility – Builds trust with UK customers, suppliers, and regulators.
- Convenience – Simplifies receiving and making GBP payments locally.
- Compliance – Helps with tax, VAT, and other administrative obligations if you have a UK presence.
However, opening a UK business bank account can be challenging for non-resident owners. Banks differ in their approach:
- Traditional banks – offer local branches and relationship managers
- Online-only banks – faster setup but limited in-person support
- Specialist banks – may offer extras like invoice financing or foreign exchange services
We have strong relationships with UK banks who are receptive to international businesses and who can help set up your UK banking facility.
5. Setting up payroll for UK staff
If you plan to hire UK-based staff, you must register as an employer with HMRC and operate a PAYE (Pay As You Earn) system to manage income tax and National Insurance. Accurate records, timely submissions, and correct payslips are essential to remain compliant.
In addition, employers must register for Auto Enrolment pension from the first day their first employee starts. This is a legal duty. You must assess your workforce for eligibility, enrol qualifying employees into a compliant pension scheme, make the required employer contributions, and submit a Declaration of Compliance to The Pensions Regulator. Failure to provide Auto Enrolment pensions to eligible employees or to submit the declaration on time can result in enforcement action and financial penalties.
We can assist with setting up most UK-based pension schemes and managing ongoing compliance requirements.
Ula Namyslowska, Payroll Manager at Rouse comments: “Even small admin errors – such as missing employee details or incorrect PAYE codes – can trigger HMRC penalties. Outsourcing payroll saves you time and worry about getting everything right.”
6. Other things you need to know after setup
Once your company is trading in the UK, you must meet ongoing compliance requirements:
- Annual accounts – filing with Companies House
- Confirmation statement – updating company details annually
- Corporation tax return – submissions to HMRC
- Maintain statutory records – director and shareholder registers
Other considerations:
- VAT filing – regular submissions to HMRC
- Withholding tax – may apply on payments to overseas entities
- Employment law – UK rules for contracts, working hours, and pensions
- Personal tax – UK residents are taxed on worldwide income and gains
Learn more
Find out more about our services for businesses setting up in the UK here.
We are here to help
Setting up a UK company doesn’t need to be complicated.
Our team fully supports international businesses with setting up and trading in the UK.
For expert assistance or a no-obligation discussion, contact us today.
Award-winning chartered accountants offering tax, audit and advisory services.
