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Starting a Business in the UK

Despite the extra amount of time and effort it takes, many expats decide to register as self-employed in the UK. There are several types of business structures to choose from. In our InterNations Guide, you can learn about how to register as self-employed in the UK as a sole trader, limited company, or partnership.
One option for working for yourself in the UK is to establish a business partnership.

Shared Responsibilities: Business Partnerships

Another option if you decide to register yourself as self-employed in the UK is to form a partnership. This is a business arrangement between two or more people, in which all partners share responsibility for the business. A partner doesn’t have to be an actual person, it can also be a limited company for example.

One person acts as the “nominated partner”, and is responsible for keeping and managing the company’s business and tax records. All partners are responsible for paying income tax on their individual share of the partnership’s profits and any losses the partnership makes are shared equally. If a partner is a company, it has to register with HMRC for corporation tax.

Business Taxes to Keep in Mind

Regardless of which kind of business entity you settle on, you should notify HM Revenue & Customs (HMRC) within three months of taking up self-employment to register for Self Assessment or you risk a hefty fine. After registration, you will receive your Unique Taxpayer Reference number which is necessary for filing your annual tax return. Before you can do this, however, you will need to apply for a National Insurance number. If your business’s turnover exceeds 83,000 GBP per annum, you will also need to register for VAT.

If you incorporate as a limited company, you must pay corporation tax. As of April 2015, the corporation tax rate is 20% for any amount of profits. This rate can change on 1 April of each year. If you are registered as a business partnership, it is important to remember that the nominated partner must submit a Partnership Tax Return, in addition to sending in his/her personal Self Assessment tax return.

When you are self-employed, it is very important to keep good business records of both your incoming and outgoing funds, as these can be requested by HMRC. Therefore, be sure that records are accurate and can be easily understood by HMRC officers. You must keep your business records, including all invoices and receipts associated with your business, for at least five years.

Don’t Forget about Insurance and Risk Assessment

As someone working in a self-employed capacity in the UK, you are required by law to make National Insurance contributions for yourself and any employees you may have. You can find a table listing the current Self-employed National Insurance rates on the UK government's website.

You should consider purchasing an insurance plan to protect your office, stock, and equipment. If you have a separate office, you should have a risk assessment carried out on the property before beginning work to make sure the space complies with the current Health and Safety Act. If your business grows to the point that you decide to hire employees, then you must take out employer’s liability insurance as well.

 

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