How to Set up a Business in the UK as an Expat

Starting a business in the UK as an expat can be an exciting and rewarding venture, offering access to a diverse market and a strong economy. However, navigating the process can be challenging if you’re unfamiliar with the legal, financial, and cultural landscape.

This guide will take you through the essential steps you need to set up a business in the UK as an expat, from understanding visa and work permit requirements to registering your business, managing taxes, and hiring employees.

Before setting up your business in the UK, it can be helpful to familiarise yourself with the country’s business landscape. The UK has a diverse and dynamic economy, one of the biggest in the world, and offers a wealth of opportunities for both startups and established businesses. Key sectors driving growth in the UK include finance, technology, manufacturing, healthcare, and creative industries.

The UK is known for its business-friendly environment, with relatively low corporate tax rates, straightforward business registration processes, and strong legal protections for intellectual property. London, in particular, is a global financial hub, while other cities such as Manchester, Birmingham, and Edinburgh offer growing markets and increasing support for tech and creative industries.

However, it’s important to be aware of potential challenges. For example, the UK’s exit from the EU has introduced new regulations, particularly in terms of trade and immigration, which could affect your business depending on your industry.

There are various legal requirements to consider when starting a business in the UK as an expat.

As an expat looking to set up a business in the UK, one of the first things you need to consider is your visa and work permit status. If you are not a UK citizen, you’ll generally need a visa to live and work in the UK. The type of visa you’ll require will depend on your circumstances and the nature of your business.

Some of the most common options for entrepreneurs include the Innovator Visa and the Start-up Visa, which are both designed for people who want to establish a business in the UK.

To qualify for these visas, you’ll typically need to demonstrate that your business idea is innovative, viable, and has the potential for growth. You will also need an endorsement from an approved organisation. Keep in mind that visa rules and requirements are subject to change, so it’s important to consult with an immigration specialist to ensure you choose the right option and have the necessary documents in place.

Once your visa and work permit are in order, the next step is to register your business. In the UK, businesses can be registered as a sole trader, partnership, or limited company. Each structure has its own set of legal requirements and implications for tax, liability, and administrative responsibilities.

Once you’ve decided on your business structure, you can complete your registration with HMRC (for tax purposes) and, if applicable, Companies House. You might also need to obtain specific licences or permits depending on the type of business you are operating. For example, businesses in regulated industries such as food or healthcare will need to apply for additional certifications.

Opening a business bank account in the UK is an important step for managing your finances. Once your account is set up, you’ll be able to manage your business transactions, pay taxes, and access other essential banking services.

To open an account, you’ll typically need proof of identity, proof of address, and your business registration details, such as your company number if you’ve registered a limited company.

Most banks will also require a business plan, especially for expats. Many banks will also require expats to submit additional paperwork to confirm your legal right to operate a business in the UK, such as your visa and work permit.

When starting a business in the UK, understanding your tax obligations is essential to ensure compliance with HMRC. The type of taxes you are required to pay depends on your business structure and activities.

It’s important to keep accurate records of your income and expenses, as you’ll need them to complete your annual tax returns. If you fail to comply with tax obligations, you could face penalties, so it’s advisable to consult with a tax advisor to ensure you’re meeting all the legal requirements.

If you’re a sole trader, you’ll pay income tax on your business profits through self-assessment. If you set up a limited company, the company itself will pay corporation tax on its profits, and you’ll pay income tax on your personal salary or dividends.

If you set up a limited company in the UK, you will be subject to corporation tax on your company’s profits. The current rate of corporation tax is 25%, though this can vary based on the level of profit your business generates.

As a business owner, you may also need to pay National Insurance contributions (NICs). If you’re a sole trader, you’ll pay Class 2 and Class 4 NICs, while limited company directors may pay Class 1 NICs on any salary received.

If your business’s taxable turnover exceeds the VAT registration threshold (£90,000 as of 2025), you’ll need to register for VAT. This means you’ll charge VAT on your goods or services and file regular VAT returns.

If you employ staff, you must register with HMRC and set up a payroll system. You’ll need to deduct income tax and National Insurance contributions from employees’ wages and pay employer’s National Insurance on their earnings.

When hiring employees in the UK, there are various legal requirements and responsibilities you must be aware of. First, you’ll need to ensure that your employees have the legal right to work in the UK, which is particularly important for expats. If you’re hiring staff from outside the UK, you’ll need to make sure their visas and work permits are in place before you finalise employment.

Once you’ve identified suitable candidates, you’ll need to comply with employment laws, which will include creating written employment contracts for all employees. These contracts should outline terms such as salary, working hours, holiday entitlement, and job responsibilities.

You’ll also need to register as an employer with HMRC and set up a payroll system to deduct income tax and National Insurance contributions from your employees’ wages. In addition, you’ll be responsible for paying employer National Insurance contributions.

As an employer, you must also ensure compliance with health and safety regulations, provide statutory sick pay and maternity/paternity leave, and adhere to workplace discrimination laws.

The UK is known for its professionalism, punctuality, and direct communication style. Business meetings tend to be formal, especially in the early stages, with an emphasis on politeness and respect for hierarchy. However, over time, many UK businesses adopt a more informal approach, and establishing a personal rapport with colleagues and clients is often encouraged.

Networking plays an important role in the UK business world. While people value directness and clarity, building trust is equally important, and personal connections can go a long way. It’s also common for business discussions to be pragmatic and focused on facts, with a strong emphasis on delivering results.

In terms of working hours, the standard working week in the UK is typically around 37.5 to 40 hours, with a good work-life balance being a priority for many professionals. Public holidays are generally observed, and employees are entitled to a minimum of 28 days of paid annual leave.

If you’re moving to the UK to start a business, make sure you’re protected with our international health insurance or working abroad travel insurance. As experts in international healthcare, Expatriate Group will ensure you’re protected with comprehensive cover designed for expats. Get a quote for your international medical insurance today.