Establishing an Ltd company in the UK is an advantageous solution for entrepreneurs who want to open or expand their business abroad. Find out why to choose a Limited Company in England and what are the advantages.
Opening an Ltd company in the UK should be considered an opportunity for those wishing to reap the benefits of simplified bureaucracy and reduced taxation.
It is no coincidence that the UK is among the most popular jurisdictions for our clients, and where we ourselves are based.
The Ltd (also Limited) is the most common company structure in the UK for small and medium-sized companies. There are now more than 4 million Limited companies in the UK and this number is growing at the rate of 500,000 each year.
This is a legal entity where the owners (known as shareholders or members) are not personally liable for debts beyond the invested share capital. This means that, in the event of insolvency, the shareholders are not required to pay the debts of the company with their personal money.
Shareholders hold shares in the company in return for their initial investment and are entitled to a share of the profits in the form of dividends. Management is entrusted to a board of directors appointed by the shareholders, who are responsible for strategic direction and operational decisions.
Opening a limited company in the UK offers numerous advantages for entrepreneurs and investors wishing to start or expand their business:
In the UK, the costs associated with Ltd companies are particularly low compared to incorporation types in other jurisdictions. This is not only tangible in the negligible costs of incorporation, but also in the costs of managing it and taxation.
In Italy, it costs between EUR 2,000 and EUR 3,000 to open an Srl company (including notary fees and accountant’s fees), whereas an Ltd company can be incorporated for as little as EUR 18. But the biggest differences are found when comparing annual management costs.
As already mentioned, an entrepreneur who opens and runs an Ltd company in Italy faces very different initial and annual costs than someone who decides to open an Ltd company in London. He or she will also have to deal with the hostile Italian bureaucracy on a regular basis.
Below is a small mirror illustrating the main characteristics of the two company forms:
| Characteristic | Ltd in the United Kingdom | Ltd in Italy |
| Procedure | Online | Notarial act |
| Minimum capital | Not required | Minimum € 10,000 (or 20% of profits/year until the minimum threshold is reached) |
| Costs | 18 € | from 2.000 to 3.000 € |
| Next Steps | None | Chamber of Commerce registration Business start declaration VAT registration |
| Appointment of auditor | Not required | Mandatory if: exceeds 4 mil in assets or revenues number of employees > 20 controls company that has the obligation |
In reality, it should be borne in mind that there are a number of variables associated with setting up an Ltd, from drafting the articles of association to opening a bank account. This is why many companies opened online never become operational. It is better to rely on an experienced agency like ours, which will be able to best advise you on the right steps to take so that your business can really take off.
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Management costs can vary depending on the needs of the company and the services it chooses to use. In general, costs are significantly lower than in Italy.
| Characteristic | Ltd in the United Kingdom | Ltd in Italy |
| Annual management: costs | from 720 to 2000 €/year | 3500 €/year |
As with Italian LLCs, in an Ltd the liability of the shareholders is limited to the invested capital, which means that the shareholders are not personally liable for the debts or losses of the company.
The United Kingdom enjoys a high international reputation and credibility for company formation. The main reason for this is the transparency and stability of the British legal and tax system, which provides a favourable environment for business activity.
With a strong entrepreneurial culture and an open and competitive market, the UK is an ideal location for start-ups and innovative companies seeking to grow and develop. All this contributes to a positive image and high credibility for the Anglo-Saxon country as a place for company formation.
Setting up an Ltd company in England also offers a favourable tax regime. In particular, such companies are subject to a lower tax rate than individuals, which can mean significant tax savings. In addition, setting up an Ltd company can provide access to tax benefits and soft loans, which may not be available to other forms of business.
| Characteristic | Ltd in the United Kingdom | Ltd in Italy |
| Taxes: profit tax | 19% | IRES (24%) IRAP (3.5% on difference between revenues and production costs) |
| Taxes: profit tax | ||
| Taxes: tax on dividends | from 8.75% to 39.35% | from 26% to 58,14% |
| Tax advance payment | No | 100% of the tax declared in the year |
The registration process starts with a proper assessment and structuring of the company architecture. Below we list the steps to be followed.
The first step is certainly to assess upstream:
If the reasons for setting up the company in the UK are related to market, commercial or personal interests, there is no need to consider alternatives. Otherwise, it is important to evaluate other jurisdictions, which might better cover the specific needs of the newco.
The same applies to other types of incorporation offered by the UK state, the LLP alla PLC, dalla holding alla branch. That is why we recommend consulting firms such as ours for an initial briefing.
The name must be original and unique. It must therefore not be similar to that of other companies or trade marks. This applies primarily if the differences can be identified in punctuation, use of characters with similar phonetics or the addition of generic words.
Furthermore, the name may not contain sensitive words or suggest a connection with the government or local authorities.
For the application to be completed correctly, it will be necessary to identify:
The tax domicile, or registered office, is the address of the company’s registered office and must be located in the United Kingdom.
It is the physical place where legal and tax documents, such as notices from government authorities or notification letters, are sent.
If you need tax domiciliation, you can rely on our company. We offer complete virtual office solutions in central London, in the prestigious EC3 area, starting from £125 per year.
The English Companies House registration system requires the production of two documents: the Memorandum of Association and the Article of Association, both of which must be attached to the application.
The Memorandum of Association (MOA) is a formal document that describes the corporate purpose of the company, i.e. the main activity the company intends to carry out. The document also contains information on the founding members, called subscribers, and the amount of shares or units they intend to subscribe.
The MOA must contain the following information:
The Article of Association (AoA) is the articles of association. This document summarises the internal rules that define how the company operates, including rules on shares or quotas, members of the board of directors, shareholders’ meetings and other matters of importance for the management of the company.
The information contained in the Article of Association may include:
Once all the necessary documentation has been produced, you can start the registration process.
Our firm will collect the documentation and send it to Companies House, which will generate the Company Number, a unique code equivalent to the Company Registry Number issued by the Italian Chamber of Commerce, within 12-24 hours.
After registration, a bank account in the UK must be opened to make the company operational.
This is the most difficult step, particularly if the company director is not a British national. In fact, banks do not easily allow the opening of a bank account.
For this reason, we have developed an ad hoc service of assistance in opening a bank account in the UK, in which we ourselves take care of introducing the administrator and the company to the bank (introduction). Often without necessarily the physical presence of the administrator himself.
Let us preface this by saying that: it is perfectly legitimate for an Italian, resident in Italy, to open an Ltd company in the UK in his own name, as well as in any other jurisdiction in the world.
That said, it is important to bear in mind that this does not automatically guarantee the right to operate in Italy or any other country.
In order to operate in Italy, it is necessary to comply with Italian tax and business regulations.
The Ltd, in order to be able to operate regularly, will not have to generate the profits in Italy, in which case the company is obliged to pay tax on the income generated by the permanent establishment in the host country. It will also have to be registered in the commercial register and fulfil all the necessary bureaucratic formalities. In the latter case, it may make sense to set up a secondary office, a branch, in Italy.
