Doing Business in the UK

The UK remains one of the most influential economies in the world, offering strong institutional stability, deep capital markets, and a strategic gateway for global business.  This country continues to attract investment from companies seeking access to a sophisticated consumer base, innovation-driven sectors, and one of the most internationally connected supply chains. 

For most businesses, entering the UK market requires a clear plan (one that balances regulatory compliance, taxation rules, and investment decisions with the long-term value the country can create)—understanding how UK operations function, the structure of limited companies, and the workings of the corporation tax system will help any organisation make informed decisions about expansion. 

Challenges of Doing Business in the UK 

Doing business in the UK involves navigating several legal and regulatory challenges. Companies must be aware of changing economic policy, competition rules, and customs requirements, especially when trading goods that interact with EU markets. 

 Businesses must maintain compliant accounts, respond to official notices, and ensure their filings are completed by the given deadline, commonly January or December deadlines, depending on tax cycles.  As of November 2025, all directors and beneficial owners holding over 25% of shares or voting rights must upload their ID documents to the UK registry before setting up a new business or being appointed to an existing business. 

Employment Law impacts how a company manages its employees. Costs associated with payroll, pension, national insurance, and benefits can influence prices, margins, and overall investment strategy. Additionally, sectors such as construction, property,  and retail must constantly monitor new regulations and local competition. 

Opportunities for Doing Business in the UK 

Despite these challenges, the UK continues to offer compelling benefits. London remains a global hub for finance, technology, and international trade, attracting both startups and multinational corporations. England’s innovation clusters in sectors such as fintech, life sciences, and advanced manufacturing add strong economic value, while the country’s transparent legal system supports long-term stability. 

The UK provides access to world-class talent across multiple industries, strong consumer demand, and a regulatory environment built to support business creation and growth. Companies expanding into the region often recognise the strategic advantage of operating in a market where economic frameworks, responsible governance, and clear rules guide decision-making. 

Leading Industries of the UK 

The UK activities are primarily driven by the service sector, which encompasses industries such as retail, hospitality, finance, and public services, including healthcare and education.  

In contrast, other sectors outside of services, such as manufacturing, construction, agriculture, and utilities, contribute to about one-fifth of the total economic output. Over the past 30 years, the share of the economy represented by manufacturing has declined, while the contribution of services has increased. 

Health and Education 

This is the UK’s largest economic group, reflecting the country’s extensive public services, universal healthcare system, and world-renowned educational institutions. It plays a central role in national employment and long-term economic stability. 

Distribution, Transport, Hotels & Restaurants 

A core driver of consumer activity, this sector includes retail, logistics, hospitality, and tourism. Its breadth makes it one of the most influential contributors to national output and everyday economic life. 

Real Estate 

Real estate (including commercial property and input rental values) remains a major pillar of the UK economy. The sector’s strength reflects high property demand, significant international investment, and the importance of housing to overall economic performance. 

Professional, Scientific & Technical Services 

This knowledge-intensive group includes consulting, legal services, research, engineering, and technology-aligned activities. It supports innovation and provides essential expertise to both domestic and multinational companies operating in the UK. 

Production Industries (Including Manufacturing) 

Production remains relevant, particularly in advanced manufacturing, energy, and industrial technologies. While smaller than in past decades, it remains critical for exports, supply chains, and regional employment. 

Finance & Insurance 

Anchored in London, one of the world's top financial centres, this sector includes banking, insurance, asset management, and fintech. It plays a strategic role in global markets and remains a major source of investment and economic influence. 

Economic and Political Outlook 

The country remains resilient, supported by strong institutions and a diversified economy. Economic indicators show ongoing investment in infrastructure, technology, and labour productivity initiatives, all designed to strengthen long-term growth. 

• Population (total): ~ 69.4 million  

• Capital: London 

• Official/main language(s): English  

• Currency: Pound sterling (GBP)  

• Political system: Constitutional monarchy with parliamentary democracy (bicameral legislature: House of Commons & House of Lords)  

• Economic system (current): A highly developed social market economy with a dominant services sector (services represent ≈ 80–81% of economic activity), along with industry and some agricultural components. 

Corporate Taxes  

The corporation tax structure includes different corporation tax rates depending on the profits a company generates. 

• Small Profits Rate: Applied to companies with lower profits. 

• Main Rate: Applied to most businesses with higher trading profits. 

Companies operating in Northern Ireland may encounter specific rules depending on the nature of their activities. Additionally, businesses generating ring fence profits from oil and gas activities face separate regulations and rates. 

• Resident companies are taxed on their worldwide profits; non-resident companies pay UK corporation tax on profits tied to UK trade, UK property, or UK land deals. 

General corporation tax rates 

• Companies with profits of £50,000 or less pay a Small Profits Rate of 19%.  

• Companies with profits above £250,000 pay the Main Rate of 25%. 

• For companies whose profits fall between £50,000 and £250,000, a “sliding scale” applies: their tax rate gradually moves from 19% toward 25%, thanks to what’s called Marginal Relief.  

• These thresholds are adjusted proportionally if a company has an accounting period shorter than 12 months or if it has “associated companies”. 

Value Added Tax (VAT) 

The standard rate of VAT is 20% 

Companies must register if either: 

• Their total taxable turnover for the last 12 months goes over £90,000 (the VAT threshold) 

• They expect the taxable turnover to go over £90,000 in the next 30 days 

Dividends in UK Companies 

Most dividends paid by a UK company are distributed gross; there is no withholding tax on typical dividends. If the recipient of the dividend is another company (i.e. a corporate shareholder), in many cases, those dividends are exempt from corporation tax in the hands of the recipient, assuming certain conditions are met (e.g. ordinary shares, non-redeemable, not preferential, etc). 

Dividends may also be distributed “in kind” (non-cash), transferring assets instead of cash; for tax law purposes, these are treated under the same distribution rules. 

Business culture 

Punctuality 

Punctuality is a fundamental part of business culture in the UK. Meetings start on time, and arriving even a few minutes late can raise concern about reliability. This commitment to efficiency also helps companies manage their agendas and budgets more effectively than they plan for the future. 

Customs & Communication Style 

British professionals value courtesy, clarity, and a measured communication style. Conversations tend to be polite and focused on facts, and it’s common to begin with light small talk. For example, discussing recent travel experiences, project timelines, or shifts in prices across the local market can serve as an easy and appropriate introduction to a meeting. Feedback is generally offered in a diplomatic, constructive manner. 

Embassies and Consulates 

London hosts a wide network of embassies and consulates that support international business visitors. These offices can assist with documentation, emergency issues, and travel guidance — resources that become especially valuable when time-sensitive matters arise or when companies are preparing for future expansion into the UK.