Limited Company (Ltd)
Company formation in the UK is effortless, fast and will take anything from 1 hour up to 2 working days depending on your chosen structure. The low registration cost, strong business presence and full tax exemption when doing business outside of the country make the United Kingdom an ideal place to set up a business, especially for non-UK residents.
Main benefits of setting up a UK Ltd
- In most cases, shareholders are liable up to the amount invested in the company's share capital.
- A limited liability company is more popular than a sole proprietorship due to its tax advantages.
- Shareholders have certain rights which are protected by law.
- The current rate of Corporation Tax is 19%. However, the corporation tax is only levied on the company’s profits from trading, investments and “chargeable gains” (selling assets at an added cost), after deduction of business expenses. UK limited companies do not pay income tax. A non-resident company is not required to register for corporation tax. Corporation tax is levied on UK source profits only and is payable at the end of the financial year, not quarterly or monthly; therefore, it is possible to make more efficient use of the company’s profits during the year.
Ltd formation is a fairly quick process taking up to 1-2 working days following receipt of all required documents.
Information about every company registered in the UK must be entered in the register of Companies House. In addition, the company is required to submit annual accounts to Companies House and annual financial reports to HMRC (British tax authority).
The following is required to set up a limited liability company:
This must be a physical business address in the UK, not a PO Box.
A UK Ltd must have at least one individual director; corporate directors are also allowed. The number of directors is not limited. Directors may be nationals and residents of any country. All UK limited companies must keep a number of statutory registers, which are publicly available, including a register of directors. In order to register the company, one director is sufficient.
Shareholders may be both individuals and legal entities. The number of shareholders is unlimited until the company starts offering its shares to the general public and becomes a public limited company - Plc.
A limited liability company may have only one shareholder holding just one share.
Authorised share capital
There is no minimum and maximum share capital in a Ltd, but all shareholders must pay the value of their shares. At least one share (e.g. at £1) must be issued.
The liability of shareholders is limited to the nominal value of their shares in the company. As a result, if the company is unable to pay its debts and must be liquidated, the shareholders are not required to pay more than what they agreed to pay or have already paid in order to pay off the company's debts. In other words, the liability of shareholders may be limited to issued shares or guarantees (which represent an obligation to pay a certain amount in the event of liquidation). For example, when issuing a loan, the bank may request information about personal guarantees of shareholders.
To sum up, the following is required to register a UK Ltd:
- Registered address
- At least one individual director
- At least one individual or corporate shareholder (director and shareholder may be one person)
- Share capital of any size
Public Liability Company (Plc)
A Plc is a different legal form of limited companies in the UK. In contrast to an ordinary limited liability company, Plc’s share capital consists of shares that may be traded on a stock exchange. All companies listed on a UK stock exchange are public limited companies.
Thus, if you intend to list your company, if you’d like your business to look solid/respectable, or if you expect to take out loans or receive other financial support from banks and credit institutes, Plc would be the best legal form for your company.
- Plc’s share capital shall be at least £50,000.
- State registration of a public limited company is permitted only after 100% of its share capital has been issued and at least 25% of this capital has been paid out in cash.
- Similar to Ltd, the liability of Plc’s shareholders is also limited to the capital they invested in the business.
- A public limited company must have at least two directors, one of whom must be an individual.
- One company secretary is also required. Its duties may be performed by one of directors. However, the company secretary must be suitably qualified and have some relevant experience; otherwise he/she must be approved by a majority of shareholders.
Dipton Business Solutions provides professional assistance in the formation and administration of UK companies. We also offer services of professional directors and secretaries, among other things.