Setting up a business in the UK: 7 key considerations for international companies

The UK is one of the world’s leading destinations for international business, offering a stable legal system, global connectivity, and access to a sophisticated customer base.

If you are considering setting up a business in the UK, careful planning is essential to ensure your structure, tax position, and operations are set up for long-term success.

Below are seven key considerations every international business should address.

1. Choosing the right UK business structure

Selecting the correct structure is the foundation of your UK expansion.

Most overseas businesses choose to establish a UK limited company (subsidiary), as it creates a separate legal entity and ring-fences liability.

Alternative options include operating through a UK branch (permanent establishment), which is simpler but exposes the overseas parent to UK tax and legal risk.

2. Understanding UK corporation tax

UK corporation tax is currently set at up to 25%, with lower rates for smaller companies.

A UK company is typically taxed on its worldwide profits, with tax payments due nine months after the year-end and quarterly for larger companies. Taxable profits are based on accounting profits, adjusted for UK tax rules.

Understanding your tax exposure early is critical when setting up your UK operations.

3. Managing international tax and transfer pricing

If your UK business is part of an international group, transfer pricing rules will apply to transactions between entities.

These rules ensure profits are allocated fairly across jurisdictions. You should also consider: 

• Controlled Foreign Company (CFC) rules 
• Global minimum tax (Pillar Two) for larger groups

Getting this right upfront helps avoid compliance risks and unexpected tax liabilities. 

 4. VAT, duties and cross-border trade

Indirect taxation is one of the most complex areas when expanding into the UK. 

The standard VAT rate is 20%, but registration rules vary: 

• Non-UK businesses may need to register immediately 
• UK-established businesses have a £90,000 threshold

If you are importing goods, supplying services, or selling to UK customers, you need to assess VAT obligations early – especially for cross-border trade and digital services.

5. Audit and financial reporting requirements

The UK has relatively strict audit requirements, particularly for international groups.

Your UK company may require an audit if the global group exceeds size thresholds (based on revenue, assets, or employees) – even if the UK entity itself is small.

Most companies report under UK GAAP (FRS 102), although IFRS may also be used depending on your group reporting needs.

6. Setting up your company and governance structure

To set up a UK company, you will need: 

• At least one director 
• A shareholder (individual or corporate) 
• A UK registered office address 
• A unique company name

New identity verification rules also require directors and key individuals to confirm their identity before incorporation.

It’s important to note that UK companies operate under a public filing system, meaning company and financial information is publicly available. 

 7. Banking, operations and hiring employees

Practical setup considerations are often underestimated.

Opening a UK bank account can take several weeks or even months, particularly if there is limited UK presence. Planning early is essential.

If you intend to hire employees, you must comply with UK employment law, including: 

• Payroll and PAYE registration 
• Workplace pension requirements 
• Minimum wage and employee rights

Ensuring compliance from the outset will help you scale smoothly.

Building a strong foundation for UK expansion

Setting up a business in the UK offers significant opportunity, but success depends on understanding the rules and making informed structural decisions early.

By carefully considering your structure, tax obligations, and operational setup, you can establish a strong platform for growth – whether entering the UK market for the first time or using it as a base for wider international expansion.

We support many international clients with setting up in the UK. Find out more about the key considerations on our website here, or contact a member of our Global team here.