Why Trade in the United Kingdom? A practical, commercial and financial overview.

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An Overview of Financial Management

UNITED KINGDOM.

Presentation transcript:

Why Trade in the United Kingdom? A practical, commercial and financial overview

Topics for Discussion > Business structures – which route? > How are profits taxed in the UK? > Basic principals > Current incentives > Overseas implications > Financial and Commercial considerations > Conclusions and the way forward

Business Structures – which route? > Limited liability company > Easy and cheap to incorporate > Initial share capital can be as low a £1 > Protection from commercial risk > Easier to structure and fund > Branch or Agency > Simply an extension of an existing business > Again easy and cheap to construct > Beware - may need to keep additional records!

Trading and UK taxation – the main features Basic principles > Corporation tax > Nil starting rate – up to £10,000 > Maximum rate only 30% > Beware the margin! > Income tax > 10% starting rate > 40% maximum rate

Trading and UK taxation – current incentives > Research and development (R&D) tax credits – 150% > Contaminated land relief – 150% > Capital allowances > Small and medium sized companies – 50% & 40% > Energy efficient plant – 100% > Low emission cars – 100% > Assets used for R&D – 100% > Grant availability > Funding for development in ‘regeneration areas’ > Refer to the Regional Development Agency

Trading and UK taxation – current incentives Secondment arrangements > Travel & subsistence rules > Housing costs2 years > Day-to-day living expenses > Relocation allowance – tax free up to £8,000 > Work days’ deductions > Individuals can maintain social security benefits in country of residence > Double taxation treaties

Importance of tax planning E.g.; Danish person earning £100,000 pa. 80% of business duties will be performed in the UK Length of stay – flexible Housing cost, say, £25,000 Typical tax costs if no planning undertaken £42,200 Typical tax costs with planning£22,900 Saving per year £19,300

UK taxation – some key considerations Overseas implications > Transfer pricing legislation > Commerciality > Transparency > Documented policy > Thin capitalisation rules > Debt versus equity balance > Withholding tax > Interest and royalty payments > Double tax treaties > Avoid paying twice

Other financial and commercial considerations Profit and cash repatriation > Dividends > Interest and Capital on loans advanced > Management charges > Redeemable preference shares

Conclusions and way forward > Establish the appropriate structure for your business/operation > Keep it simple > Take advantage of low entry costs > Low tax rates (?) > Various tax incentives > Businesses and seconded employees > Take advice! > Getting it wrong costs > Ignorance is no excuse > Do it early