If you’re considering setting up a property business in the UK, then there are certain financial formalities to come to terms with. Not least, this includes tax, setting up of bank accounts and dividends (if you’re a limited company).
First up, you’ll have to register your business with HM Revenue and Customs. Do this as a sole trader, by contacting the relevant self-assessment department. If you’re intending on registering as a company, then it’s Companies House that you’ll have to inform. Either way – neither should take long and both can be done online. The type of documents officials will want to see is ID for a director and shareholder, your company articles of association as well as your memorandum of association and also the statement of capital, and your company’s standard industry classification coding.
Opening up a UK business account
In order to do this for you, a bank will require proof of your identity. This could be via a driving licence or passport, and a utility bill or bank statement. If you’re living overseas and don’t have an address in the UK, then this is where a Joint Venture partner comes in! Otherwise, you could apply to open an account in the Channel Islands or approach one of the main high street banks who operate Off-shore accounts.
Meanwhile, you’ll also have to supply the name of the business, registered address and what type of business it is. The bank will also want to know if you have any loan requirements and what you believe your first year’s turnover will be. Some banks may even ask to see your business plan (especially If you’re looking for a loan).
UK salaries and dividends
If you plan on registering as a limited company, then it’s a good idea to have yourself down as an employee (if you can). That way you’ll benefit from the free tax allowance of nearly £11,850. In order to do so you have to register as a non-UK citizen and be given a work visa. When accepted to work in the UK, you will receive a National Insurance number (which you’ll pay tax for). You can also take some of your salary in the form of shares or dividends. That way, you won’t have to pay tax on them and can invest the money back into the company.
As a UK company director, you will be liable to pay corporation tax on behalf of any profits the company makes. At the moment, in the UK this is less than personal income tax (19 per cent compared to a basic tax rate of 20 per cent or higher rate of 40 per cent for an income that exceeds £50,001). In addition, the Corporation Tax rate is due to come down further, to 18 per cent for 2020.
If you’re taking on an employee to work for you then you’ll need to ensure you’re paying them above the UK minimum rate. You’ll also need to get Employer’s Liability Insurance.
Instead of going through banks for currency, consider getting a specialist money transfer account. The company TransferWise run a Borderless account, for instance. This cuts back drastically on international exchange fees, because all money is sent and received in the same currency.