Living outside the UK is no barrier to running a registered English business. Foreign nationals can serve as directors and shareholders without ever setting foot in Britain. What you do need is a UK registered office address — a minor logistical step, not a real obstacle.
The appeal is real: a well-regarded legal system, digital-first registration, competitive tax rates, and instant credibility with international clients and banks. The question isn’t whether to register — it’s how.
⚠ Owning a UK company does not automatically shift your tax obligations to the UK. Where a company is actually managed and controlled determines its tax residency under both UK law and international treaty tie-breaker rules. Read Section 6 before deciding.
2. Three Structures, One Right Answer for You
Most founders choose between two options. A third exists for partnerships.
Sole Trader
Registration is free via HMRC Self Assessment. Tax is simple: Income Tax (20%, 40%, or 45%) plus Class 4 National Insurance on all business profit. Zero legal separation means personal assets — savings, property — are exposed if things go wrong.
Limited Company (LTD)
A distinct legal entity with its own tax number and bank account. Directors are generally shielded from company debts, though personal guarantees, wrongful trading, or breaches of director duties can pierce that protection. Registration costs £100 online at Companies House (from 1 February 2026). Tax is levied on company profits, not your personal income, which often allows more efficient structuring of remuneration through salary and dividends.
Limited Liability Partnership (LLP)
Suited to co-founders in professional services — law, consulting, accounting. Combines partnership flexibility with limited liability. Less common for tech startups or solo operators.
Head-to-Head Comparison
| Factor | Sole Trader | Limited Company (LTD) |
| Setup cost | Free (HMRC registration) | £100 online / £156 same-day (from 1 Feb 2026) |
| Liability | Personal — your assets are on the line | Corporate — personal assets generally protected* |
| Tax model | Income Tax 20–45% on all profits | Corp Tax 19–25% on taxable profits + salary/dividends |
| Annual admin | Self Assessment once a year | Accounts + Confirmation Statement (£50/yr from 2026) |
| Ideal for | Freelancers, early-stage, profit under ~£30–40k | Growth businesses, client-facing, profit over ~£30–40k† |
| Non-UK founders | Workable for simple setups | Fully available — no UK residency required |
* Personal liability in an LTD can arise from personal guarantees, wrongful trading, or failure to meet director duties.
† The £30–40k profit threshold is a commonly cited guide, not a rule. The right answer depends on your total income, dividend allowance, NI position, and how much profit you plan to retain. Run the numbers with a UK accountant — especially given dividend tax rate changes from 6 April 2026.
3. What Does It Actually Cost in Year One?
Here is a realistic budget — incorporating the Companies House fee changes that took effect on 1 February 2026.
| Item | Sole Trader | LTD |
| HMRC / Companies House registration | Free | £100 |
| Confirmation Statement (annual) | — | £50 |
| UK registered office address | — | £50–£150/yr |
| Accountant (year 1) | £200–£600 | £500–£1,500 |
| Business bank account | £0–£120 | £0–£150 |
| Formation service (optional) | — | £100–£300 |
| Year 1 total (estimate) | ~£200–£720 | ~£700–£2,100 |
ℹ The online registration fee rose from £12 to £100 on 1 February 2026. The Confirmation Statement (formerly Annual Return) now costs £50 per year digitally. Budget accordingly.
4. UK Taxes in Plain Language
Sole Trader: Simple but Steep
Every pound of profit is personal income. You pay Income Tax and Class 4 National Insurance on all of it. There is no way to split or defer income within the business structure. Above roughly £30,000–£40,000 in annual profit, this tends to become less efficient than operating through an LTD — but verify this with an accountant given your specific situation.
Limited Company: More Moving Parts, More Options
Corporation Tax applies to company profits at three effective rates (since 1 April 2023): 19% on taxable profits up to £50,000 (small profits rate), 25% above £250,000 (main rate), with marginal relief calculated on a sliding scale for profits between those bands. Most owner-directors draw a modest salary and take the rest as dividends.
Dividend tax rates from 6 April 2026 are 10.75% (basic rate), 35.75% (higher rate), and 39.35% (additional rate). The tax-free dividend allowance has been cut significantly — check the current figure on GOV.UK or with your accountant.
⚠ If you own more than one company, the £50,000 and £250,000 Corporation Tax thresholds are divided between associated companies. The definition of ‘associated’ is technical — seek specialist advice before creating any group structure.
VAT: The £90,000 Trigger
Once your taxable turnover hits £90,000 in any rolling 12-month period — or you expect to cross that in the next 30 days — VAT registration becomes mandatory. The threshold rose from £85,000 on 1 April 2024. Below it, registration is optional.
Making Tax Digital (MTD): What Sole Traders Need to Know
From 6 April 2026, sole traders and landlords with total income above £50,000 must file quarterly digital updates to HMRC. The threshold drops to £30,000 in April 2027 and an expected £20,000 in April 2028. If you’re a Sole Trader approaching those figures, plan ahead now.
5. Registering an LTD: The Process Step by Step
The 2026 process includes new identity and transparency requirements introduced under the Economic Crime and Corporate Transparency Act. Here’s the full sequence:
1. Check and reserve your company name. Use the Companies House name search to confirm it’s unique and free of restricted words (such as ‘Bank’ or ‘Royal’).
2. Pick a SIC code. The 4-digit Standard Industrial Classification code describes your business activity and must be declared at registration.
3. Appoint directors and identify shareholders. A single non-UK resident can be the sole director and shareholder. No UK residency required.
4. Register your Persons with Significant Control (PSC). Anyone holding more than 25% of shares or voting rights must appear on the PSC register — publicly visible on Companies House.
5. Agree on share capital and adopt Articles of Association. Most simple LTDs issue one ordinary £1 share and adopt the standard Model Articles.
6. Secure a UK registered office address. Non-UK founders typically use a registered office service (£50–£150/yr).
7. Provide a registered email address. Required since March 2024. Companies House uses it for official correspondence; it is not made public.
8. File with Companies House and verify identity. Submit online (£100) or via the same-day software route (£156). Directors and PSCs must complete identity verification — either directly or through an Authorised Corporate Service Provider (ACSP).
9. Register for Corporation Tax. You’ll receive a Unique Taxpayer Reference (UTR) to use in all future tax filings.
10. Open a business bank account. There’s no single statute mandating a business account for an LTD, but separating company and personal finances is both a practical necessity and an accounting obligation. Starling, Tide, Wise Business, and Revolut Business all offer remote onboarding suitable for international founders.
6. The International Tax Reality Non-UK Founders Must Understand
A UK company is not a tax shelter. Where a company is incorporated tells you very little about where it owes tax.
Under UK law and HMRC guidance, a company is UK tax resident if it is incorporated here or if its central management and control is exercised in the UK. If a UK LTD’s key decisions are made by a director sitting in New York, Berlin, or Kyiv, that company may be treated as tax resident in that jurisdiction under local law — a determination that turns on the “place of effective management” tie-breaker clause in double taxation treaties.
The UK maintains Double Taxation Treaties with many countries, including the United States, designed to prevent the same income being taxed twice. But a DTT does not eliminate your local filing or disclosure obligations — it determines how much each country can tax.
⚠ Get advice from a qualified tax professional in both the UK and your country of residence before incorporating. Doing so after the fact is considerably more expensive.
7. Save Time and Avoid Costly Mistakes — Work With Specialists
Company formation paperwork is manageable if you’re based in the UK and familiar with the system. For international founders, the combination of identity verification requirements, PSC obligations, registered address logistics, and post-registration HMRC setup creates real friction — and real risk of errors that compound over time.
The practical answer is to work with a formation specialist from the start: someone who handles the filing, ensures compliance with 2026 requirements, and sets up the structure correctly so you’re not fixing it later.
★ Trusted Company Formation Support
For founders who want the process handled by people who do this professionally, we recommend looking at the company formation services offered by Audit Consulting Group. Their team covers everything from structure selection and identity verification through to registered office address, HMRC registration, and ongoing corporate governance — with particular experience supporting non-UK clients.
Learn more about their services: Company Formation — Audit Consulting Group
8. Six Things That Catch First-Time Founders Off Guard
• Forgetting the PSC register. Failing to declare Persons with Significant Control, or not updating the register when ownership changes, is a criminal offence under UK law.
• Treating limited liability as total immunity. Personal guarantees on loans and wrongful trading can expose you personally. An LTD limits risk, it doesn’t eliminate it.
• Missing the Corporation Tax notification window. You have 3 months from starting to trade to register with HMRC. Penalties apply for late notification.
• Assuming the LTD is automatically more tax-efficient. With dividend rates rising from 6 April 2026, the calculation has shifted.
• Ignoring the VAT clock. VAT registration is mandatory once taxable turnover reaches £90,000 in a rolling 12-month period, or if you expect to cross it within the next 30 days. Many founders miss this second trigger.
• Skipping the PE analysis. If you manage a UK company entirely from abroad, your home country may claim it as a domestic taxable entity regardless of where it’s incorporated.
Registering a business in England is genuinely accessible for people anywhere in the world. But accessible doesn’t mean simple — the compliance layer in 2026 is meaningfully thicker than it was even two years ago, and the tax picture for international founders has real complexity.
Pick your structure carefully. Get professional input before you file, not after. And if you want to hand the process to someone who handles UK company formation daily, the link below is a good place to start.
Audit Consulting Group — Company Formation Services — professional setup for international founders, handled end to end.
