Interested in setting up a new business within the UK? Perhaps you are contemplating making a substantial financial investment within the United Kingdom. In both cases, income tax planning should play a central role. Accurate planning with a trusted partner paves the way to a successful venture. Failure to adequately plan, on the other hand, can lead to serious pitfalls that may erode the value you seek.
Understanding UK Corporate Tax Planning
International tax planning can be complex. And, while the UK offers access to an incredible range of opportunities, corporate tax planning should take precedence. It helps to understand the distinctive features of UK tax law and how those rules apply to corporations.
Is Tax Assessed on Foreign Businesses in the UK?
Tax law is complex and ever-changing. It also varies drastically from nation to nation. If you represent an international business seeking to establish a presence in the UK, understand that your operations will be subject to UK law, which makes tax planning absolutely critical. Note that UK corporation tax is charged on both UK resident companies, as well as those that create a permanent establishment within the UK for trade purposes. Because of this, there is a potential for double taxation – UK taxes, plus taxes from your nation of origin. However, relief may be found with a double tax treaty.
Am I Taxed as a Shareholder in a UK-Resident Business?
If you are considering the prospect of investing in a UK-resident business as an international investor, understand that this could also lead to double taxation between the UK and your home nation. Relief may be available under a double tax treaty, but navigating this area requires in-depth expertise in international tax planning strategies.
Am I Liable for Income Tax with a Non-Resident Business?
In most situations, non-resident businesses operating in the UK are not liable for income tax. However, that is not true in all situations. There are some conditions under which you could become liable for income tax, notably with specific types of income generated by sources within the United Kingdom. A specialist in tax planning for new businesses and international tax planning can help you understand these types of incomes and devise strategies to limit, if not eliminate, such a tax burden.
Questions to Consider When Setting Up Operations in the UK
As part of your tax planning process, you must answer several important questions before setting up operations within the UK. Some of these include the following:
- Will you create a permanent establishment within the UK? Double-taxation is a real possibility, so it is important to research double taxation treaties and their effect on permanent establishment and taxation.
- Will you form a branch or is a subsidiary a better option? Both are possible, but they are treated differently under UK tax law. Working with a specialist allows you to benefit from tax planning services that include determining the right establishment option.
- If you choose to create a subsidiary, to what extent will you finance it with either equity or debt? Are there limitations on deducting interest payments from your taxes?
- Will you need to register for VAT? If so, do you have a strategy in place not just for the registration process, but ensuring you uphold your responsibilities here?
- Will the branch or subsidiary need to register for PAYE (pay as you earn) income tax deductions? What about National Insurance contributions? These can place significant constraints on your capital.
Challenges with International Tax Planning
Creating and then maintaining an effective tax planning strategy for a company conducting business internationally has never been particularly simple. Today, it is more complicated than ever, with a growing number of legal hoops you must jump through to ensure compliance with tax laws in multiple nations. The right tax planning for new business establishments abroad and in the UK can help achieve important goals, including:
- Timing your cash and tax needs
- Identifying, understanding, and taking advantage of all tax deferrals available to you
- Identifying and then taking advantage of foreign tax credit opportunities
- Identifying and then creating strategies to avoid double taxation
- Create a strategy that adequately controls your tax exposure
An appropriate tax planning strategy is flexible enough to handle the ongoing changes in international tax law but sustainable and predictable enough to ensure that you can continue to operate a thriving business. As you might imagine, creating such a strategy requires in-depth expertise, experience, insight, and knowledge – a combination that's sometimes difficult to locate.
What Can International Tax Planning Services Help Me Accomplish?
If you are considering the setup of a new business, branch, subsidiary, or investment within an existing UK business, tax planning specialists can offer significant advantages and benefits. At Lawrence Grant, we provide a full range of solutions and services when it comes to tax planning for new business needs, including income tax planning for companies looking to establish a presence within the UK market.
We can advise you on how to structure transactions to achieve profitability goals while avoiding taxation challenges. We can also aid with cross-border issues, like Brexit, the use of LLPs, VAT and employment taxation, and so much more. If you'll be travelling to the UK to oversee the establishment of your business here, we can help you prepare and qualify for a Tier 1 Entrepreneur Visa, as well.
Simply put, Lawrence Grant delivers critical tax planning solutions that help you streamline operations while maximising tax savings. Contact us today to schedule your consultation – we will get to know your company, your goals, and challenges, and create a bespoke plan that takes you from where you are now to establishing a thriving UK presence.
Creating international tax planning strategies is just one part of what we do, though. We also provide a broad range of services for UK and international businesses, from bookkeeping to business recovery and more. How can we help you grow today?