How to Start a Business in the UK for Foreigners

The United Kingdom is one of the largest economies in the world, with a GDP of over 2.2 trillion GBP in 2023¹. It has long been an attractive country to start a business in for both UK citizens and immigrants.

However, changes have begun to occur in the country, making opening a business in the UK a challenge. Nevertheless, it is still possible to start a business in the UK as a foreigner, as long as you have a strong plan and are clear on the rules.

One of the challenges that foreigners face is the UK's immigration system; recent changes in the have made it more difficult for foreigners to get the appropriate legal documents required to incorporate a UK company

In this article, you will learn how to start a business in the UK for foreigners, how to incorporate a company in the UK, plus we’ll detail the information you need to get your company off the ground. We’ll provide insights on how a Wise Business account could help you save time and money with sending and receiving international payments.

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Before launching your idea for a business as a foreigner in the UK, you need to consider the following steps:

Step 1: Get a visa

Getting a visa is dependent on your nationality; according to gov.uk, there are over 40 countries that need a visa before entering into the UK. You will need a visa before entering the UK if you are from any of the countries listed by the UK government, and more so, a visa to allow you to live legally in the UK and work before starting a business.²

Applying for a visa may seem difficult; however, it is easy with just the right information. There are different types of visas, and it is therefore important that you check with your travel agent to ensure you apply for the correct visa. UK visas are usually declined or accepted within three weeks.

Step 2: Choose your company name

Deciding on a name for your business venture is a very important job. It’s even more important if you decide to set up a limited company, as, in the UK, there are rules which could impact your choice.

Before you choose a name, it’s a good idea to use a company name checker to make sure your choice is available and not being used by another business. You should also check the UK Intellectual Property Office trade marks register to ensure your chosen name doesn’t infringe an existing trade mark³.

Sensitive words and expressions

Another point to bear in mind when deciding on your business name⁴ is that there are some words and expressions that need approval by the Secretary of State to be used in a company, LLP or business name. This is to ensure a name doesn’t mislead or potentially harm the public.

Such words are referred to as sensitive words and include terms such as:

• British, Institute or Tribunal to suggest eminence or status

• Implies a connection to the UK government or local authority

• Includes a word representing a regulated activity

• Includes a word which could be offensive

The GOV.uk website provides a full list of sensitive words and expressions along with who you should contact for approval⁵.

Step 3: Consider your business structure

Before starting a business in UK as a foreigner, you must find out the kind of business structure that exists and thrives in the country. You should also do your homework on the legal position and tax payment of every business structure.

After getting a visa, which makes you legally eligible to start your own business, the second step is to create a legal structure. You must note that the legal structure of your business affects the amount of tax you pay. There are four categories of business structures in the UK⁶:

Sole trader: the simplest type of business structure available in the UK. There is no difference between the owner of the business and the business. To start a sole trader business in the UK, you need to first register your business with HMRC before the end of the year⁷.

Partnership: business types that involve more than one person managing the company. To open a partnership business, you need to register with HMRC, and both parties must be involved with registering the business.

Limited liability partnership (LLP): the type of business structure where partners have limited liability with the business obligations based on how much they’ve invested in the company.

Limited company: can be limited by shares, so the shareholders liability is based and limited to the money they invested, and their personal assets are protected. Limited companies must pay incorporation costs to get registered by the Companies House.

Step 4: Open a business bank account

Opening a business bank account is an important step when starting a business in the UK as a foreigner, in order to keep your personal and business assets separated. Opening a business in UK can be complicated, but getting a business account doesn't need to be!

A Wise Business multi-currency account is a great alternative to traditional banks, which may have an extended requirements list to open a business account for a foreigner.

As a digital and flexible alternative to banks, with Wise Business you can send, receive and manage your money internationally, without paying crazy fees or even-crazier exchange rates – just a small, fair charge when your money moves between currencies. Wise is a safe provider, and is fully regulated.

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Step 5: Register for tax

After selecting your legal structure, the next step is to register your business with a UK tax corporation. Failure to make your tax payment could result in your business being close down, which may also affect your stay in the UK.

After registering your company, the organisation responsible for handling the national register of companies - His Majesty’s Revenue and Customs - HMRC will send you the information needed to register your business as it relates to tax matters.⁸ The following information will be needed:

• Company’s registration number
• Start date of work
• The end date when accounts will be prepared annually

After registering your business for tax corporation, ensure that you keep records of the following:

• Annual Accounts of the company, including the profit and loss
• Purchase and sales invoices
• Order and delivery notes
• Bank statements, cheque books, and electronically evidence of payment received
• Cash books
• Credit notes and debit notes
• VAT records
• Payroll records
• Any other relevant business information

Get your business off to a great start with Wise Business

Finally, opening a business in the UK may be challenging, however, the United Kingdom is a vibrant place where business can flourish. If you choose to run this path, Wise can make your life easier - so you focus less on the admin, and more on connecting with customers.

With a Wise Business account, you can hold and exchange 40+ currencies with the mid-market exchange rate, and linked debit and expense cards for easy spending. Get local account details for 8+ major currencies, and send payments to suppliers, contractors and staff in 70+ countries, with the low, transparent fees every time.

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Sources used:

Sources last checked Apr 18, 2024