UK Limited Company
The UK Limited Company is a separate and legal entity. The ownership of the UK Ltd. Company is separate from the shareholder who owns it, and the director who manages and runs the company. The UK limited company provides its shareholders with limited liability.
UK Company (LTD.)
UK company registration is favored by our clients because the tax rates for UK companies/UK corporations are more favorable than other European nations. There are two specific UK Ltd. structures that garner more interest from our clients due to the greater tax savings opportunities and enhanced commercial benefits. These are:
- UK Holding Company
- UK Limited Company as an Agent Company.
The company registration process for a UK Holding company formation and a UK Ltd company registration is the same.
Low Tax UK Limited Holding Company
Incorporation of UK Holding Companies has increased largely because these companies are able to pay dividends to non-UK resident shareholders free of withholding tax. In addition, dividends that are issued by a UK subsidiary to a parent holding company (that is registered in the UK) are entirely exempt from corporation tax.
A Holding Company is a company that as a rule restricts its activities to stock ownership in and supervision of the management of other companies. Generally, UK Holding companies own controlling interest in such companies.
Low Tax UK Ltd Agent Company
A UK Ltd. Company can be used as a sales ‘agent’ for an offshore company (one incorporated in another jurisdiction).
In this structure, as a sales agent, the role of the UK Ltd. Company does not involve direct sales activity. It can facilitate the sales and payment transactions between offshore company and vendor/buyer, for which the UK Agent Company is paid a contracted market rate commission (5-10%).
Here is an example of how this structure of the UK Ltd company as a Sales Agent works to reduce taxes:
- An offshore company registered in Panama buys carpets in Turkey and sells the carpets to clients in France, Spain and Italy using the UK Ltd company as the selling agent. The buyers in France, Spain and Italy are in contract with a UK company Ltd and not the Panama offshore corporation. Payment from the buyers is made to the UK Company who then pays the Panama Corporation (less the agreed 5% commission).
Since the UK company does not trade within the UK or do any UK business there is no local (UK income), all income is generated offshore. The UK Ltd. company only pays corporate tax on the commissions earned and can also offset transaction expenses (e.g. accounting fees, promotions, bank charges, legal fee, maintenance and repair, rent) to further minimize the tax liability.
To satisfy an application for a UK Agency company:
- The Sales Agent UK Company should not be engaged in trade activity in the UK.
- There must be a legally binding contract between the offshore company and the UK Ltd which sets the terms of the contract such as the commission rates.
- The Beneficial Owner of the offshore company should not be a resident of the UK (therefore not subject to personal income tax in the UK)
We recommend that a distinct and separate director and shareholder is assigned to the two companies.
Advantages of UK Incorporation
The limited UK Corporation has the following beneficial features:
- It is a separate legal entity and shareholder’s personal assets are separate and therefore protected.
- Reduces tax liabilities.
- Offers a greater presence, credibility and reputability.
- Benefits from favorable EU tax treaties.
- Benefits from over 100 double taxation treaties.
- You can appoint nominee company officers and shareholders. No-one has to know who is running the company.
Company UK Taxes
- Corporation Tax rate on net profits is 20% for the first £300,000, 30% when profit is above £1,000,000
- There is no withholding tax on dividends (paid up), no capital duty on capital contributions or increases in capital
- Financial statements (including overseas trade) must be filed with company’s house regardless of whether or not there is no UK trade activity. We provide these services; refer to our Pricelist for Bookkeeping/Accounting Services for UK LTD.
UK Ltd. Formation
- A minimum of one director and one shareholder is required.
- Corporate directors are allowed but at least one of the directors must be a natural person.
- Foreign nationals (within or outside the UK) and offshore companies qualify as UK Ltd. officers.
- There is no legal requirement for a secretary, but then the directors must conduct all compliance duties such as annual filing. We provide nominee secretary services for our clients.
- Company formation is easy and affordable compared to other EU jurisdictions.
- The company register of members is open to the general public; we recommend the use of nominee member services with UK Limited incorporation if confidentiality is needed.
UK Ltd. Incorporation Capital
- There is no statutory minimum or maximum capital for a private company
- There are no restrictions or regulations on the movement of capital upon UK company formation.
- Private Limited Companies have a minimum authorized share capital of £1 or its currency equivalent. The minimum issued capital is one share, but we recommend capital of £ 1000 to reflect the stability and strength of the company.
UK Companies (LTD.) Maintenance and Administration Services
- PAYE has to be maintained
- The company must hold AGM
- UK Companies must file accounts and tax returns annually. It is common for the nominee secretary to undertake filing of documents with Companies House and submitting the Annual return.
- No audit is required on UK companies with a turnover of less than £6.5M and asset valued less than £3.2M.
- Nominee Shareholder, Nominee Director and Nominee Secretary Services are accepted.
We provide full suite of Accounting and Bookkeeping services for all our UK companies that do not want the burden of administrative responsibilities. Please refer to our Pricelist for UK Company Accounting Services.
Standard UK Ltd. Company Package from US $430
UK Ltd. Company with Nominees Package from US $930
Low Tax UK Ltd Company Structure from US $1350