Setting up your UK company

Whether you have experience in running businesses, or are setting up for the first time, it is important to make yourself aware of the latest requirements for companies in the UK. Getting things wrong or missing them completely can be expensive, inconvenient, and highly disruptive, especially when regulations change all the time.

Incorporating your company

The first step, incorporating your company, immediately results in a commitment to make filings with Companies House – an annual confirmation statement, annual accounts and details of any changes for the company, such as new shares or a change of address.

Identity verification for company filings

Company law changed recently, and individuals who register companies or file with Companies House will have to prove they are who they say they are by verifying their identity. For more details on this please see our recent The Economic Crime and Corporate Transparency Act 2023 insight.

Filing annual accounts

Annual accounts must be in a statutory format and in accordance with UK GAAP or IFRS, and they must be filed at Companies House within nine months of the accounting year end. The accounting year end automatically sets at the end of the month that falls 12 months after incorporation but can usually be changed. The company may require an audit if the size of the total worldwide group, judged by turnover, assets and number of employees, is not small enough to meet the UK thresholds for a small group. Some companies must have an audit even if they meet the small thresholds, such as public companies or some companies providing financial services. Even if a company is dormant, and Companies House has a strict definition of ‘dormant’, an annual filing is required providing details.

Notifying HMRC and corporation tax

When you set up your new company, Companies House will notify HM Revenue and Customs (HMRC) of your new company, and from that point onwards, the directors have a responsibility to inform HMRC when the company starts trading. Once you are trading, there will be an annual requirement to file corporation tax returns which align with your annual accounts. Corporation tax returns must be filed online and a ‘tagged’ set of iXBRL formatted accounts must be filed along with them. From 1 April 2023, there is no longer a single corporation tax rate. Companies with profits up to £50,000 will have a small profits tax rate of 19%, and between £50,000 to £250,000 this will be at the main rate of 25% (30% for ring fenced companies), reduced by a marginal relief, which provides a gradual increase in the effective corporation tax rate. Corporation tax must be paid by the payment deadline - usually nine months and one day after the end of the ‘accounting period’ – and HMRC charge interest on overdue corporation tax. The return must be filed by the filing deadline - this is usually 12 months after the end of the accounting period. There are penalties for late filing.

Registering a payroll scheme

Often the next step once a company has been set up is hiring employees, and luckily registering a payroll scheme in the UK is quick – only around five working days to get the employer fully registered with HMRC. A UK company is required to register as an employer if it has any paid employees (including directors), submit monthly returns, pay the monthly employment tax and submit year end returns on or before the final payday. The UK payroll tax year runs from 6 April to 5 April. The company will also need to report any benefits provided to employees on form P11D and P11D(b) by 6 July every year and pay any class 1A National insurance due on the benefits each year. If you have employees, then you must enrol them into a workplace pension scheme and contribute towards it. This is called 'automatic enrolment'. The scheme needs to be available, irrespective of whether an employee wishes to join. In fact, the only way an employee can decline is by opting out via the pension scheme, i.e. they must join the scheme before they can opt out of it and cannot decline via their employer. Explore The Pensions Regulator website for in-depth information on your obligations as an employer.

VAT registration and digital requirements

Once your business generates sales / revenues, you will need to consider VAT. The VAT registration threshold is currently £90,000 per year and the threshold includes taxable supplies at the standard rate, reduced rate and zero rate of VAT. If your company exceeds the threshold, or you expect it to soon, VAT registration is required and VAT returns will need to be submitted to HMRC, usually on a quarterly basis, along with payment of any VAT due. Under HMRC rules, once your business is VAT registered, it will be required to keep all VAT records digitally, and file the returns through compatible software, usually accounting software.

Tailored support for compliance needs

Every company has unique compliance needs. Our Business Solutions team can manage all areas discussed in this insight, helping to reduce your administrative tasks and giving you confidence that your business is compliant with UK rules. Examples of other areas that may need consideration are HR matters, customs rules around importing and exporting, tax incentives for potential investors and the transactions between the individual shareholders and the company.

For more information on UK compliance for new businesses, please contact Talitha Gibney or your usual Crowe contact.