The best way to start your business activity in the UK.
The only thing you need to do is to complete and send your application form via on-line services. You can do it for free up to 3 months after starting your business as a self-employed. This situation of lack of hindrances results from the policy of tradition and civil liberties (including your right to work and enrichment). By registering their companies in the UK, Polish men are treated equally to other nationalities in the EU. The process of starting running your business as a foreigner in the UK is really simple in comparison with other countries, because you do not need to special permissions or licenses. You have to be issued with some permissions if you are going to run your business in some industries: banking services, insurance services and investment advice or trade; the foreigner should apply for some kind of permission and licence to peform these kinds of business activity.
Forms of business activity in the UK
Except for working on the basis of self-employment, there are a lot of kinds of business activity in the UK, such as :
- Private Limited Company – companies – it becomes the corporate body after registering in Companies House,
- Partnership- Limited liability partnership is one type of partnership.
Self-employment in the UK
The most popular and appropriate form of running your small-scale business activity in England is to register as a self-employed. In the UK, natural persons that start their own business activity, have to register in the local office of HM Revenue & Customs, i.e. registering their arrival in the UK and their self-employment. After that, everyone who is covered with the National Insurance policy (see below) should apply for NIN (National Insurance Number) in the local JobCentre Plus. If you are going to start your work in a builing industry in the UK, except meeting requirements that were presented above, you should also apply for temporary CIS-4 (Constructions Industry Scheme). After receiving your NIN, you can apply for permanent CIS-4. Everyone who is self-employed, by exceeding the fixed amount of annual turnover, is obliged to register as a VAT payer. This kind of situation arises rarely, because the fixed amount is defined at the relatively high level (in 2013 it is 77 000 pounds). The issues that are connected with income tax and natural persons that are running their businesses in England and Poland at the same time and applying to these running their businesses only in the UK were regulated under the agreement dated 16 December 1976 (between the government of Poland and the UK in the field of avoiding double taxation). It have been in force up to 31 December 2006. This agreement was based on proportional deduction. It means that your annual income which was generated in the UK on the basis of running your business fixed to one, specific office (address), is also the thing of taxation in Poland. However, the amount of tax that was deducted in the UK should be deducted from the amount of tax that is due in Poland. Since 2007 a new, better one convention, between Poland and United Kingdom, was signed. It regulates the matters related to the process of avoiding double taxation on income and on capital on the basis of running your business activity in England. (Dz. U. of 2006 No 250, Item 1840). It is applied for income that was generated on and after 1 January 2007. Since 2007, the principal method that is manadatory is the exemption with progression. On the basis of this method, If you have the place of residence that is connected with your tax return, your taxable income will be deducted in the amount of taxable income that is the basis of your tax return in source-country. The income that was generated abroad is exempt from tax in Poland, (for doing your tax return on the basis of other income that was generated in Poland, you should use the tax rate that was calculated for your whole income: for Polish part of it and that part which was generated abroad. Therefore, since 2007, somebody who at the same time earns his/her money in Poland and in the UK, should include the proper amount of his/her British income in Polish tax return. On the other hand, if you have been working since 2007 only in the UK, you do not have to do your tax return in Poland (Poles that work in the UK do not have to do their tax returns in Poland for income which was generated abroad). Polish men who work in the UK and still have to do their tax returns in Poland, have to attach PIT/ZG (it consists of information about your income from working abroad and the amount of tax that you paid abroad)for to their annual tax return. In this form you should present an income which was generated abroad and tax that you paid there after transfering it into the amount presented in zloty (Income in the foreign currency are converted into Polish zloty on the basis of currency rates which were presented at the day of receiving or placing at the disposal the tax payer. These are issued by the bank which is related to tax payer. These tax rates are used at the moment of buying or selling foreign currency. If the tax payer have not been related to any bank, his/her income will be change into zloty by applying the average rates of foreign currencies from the day of generating his/her income. These rates are published by The Central Bank. These rules are also applied for converting the amount of your abroad-paid tax to zloty. The attachement should be include in your Polish tax returns: PIT-36, PIT-36L, PIT-38. After the Poland’s accession to the European Union, HMRC casted all race-based discrimination out. If you are registered and you pay your tax – you are OK. Taxman does not ask about your migration status. Therefore, only in the UK you can claim your tax back even if you have been working without permission and valid visa. But if you do not pay tax, they can be less sympathetic. Britons are used to think about paying tax as a duty of everyone and somebody who parading with his/her not paying for tax is poorly looked upon. Because of the fact that then you freeload. Unfortunately, many of beginning Polish businessmen in the UK try to talk aloud about their resources. The conditions of National Insurance for somebody who is migrating through the EU are regulated in Council Regulation (EEC) of 14 June 1971 on the application of social security schemes to employed persons, to self-employed and to members of their families moving within the Community. According to this regulation, a self-employed who is running his/her business in two or more Member States shall be the subject of legislation of the Member State in which he pursues an activity as an self-employed person. People who are running their businesses only in the UK are obliged to pay National Insurance Contributions. In the UK we have six class of National Insurance. Self-employed persons are qualified to pay one or two class of Nationa Contributions, basing on their annual net income. Everyone who is a self-employed in England have to pay Class 2 National Contributions, on the other hand, everyone who has generated the annual income over 7,755 pounds, has to pay Class 4 National Contributions.
If you would like to start a small-scale business in the UK, you should also think about starting a partnership which is similar to Polish civil law partnership. It is not the subject of registration. Partnership is founded on the basis of making an agreement between partners that are minded to geerate a profit. It has not legal personality and is not the subject of registration. The number of partners is usually limited up to 20. Every partner is responsible for its liabilities. Its partners should be registered as self-employed persons. Business activity in the UK. The other copartnerships should be registered in Companies House. Companies House provides services in registering and gathering information about companies in England, Wales and Scotland. The registration of companies in Northern Ireland, Isle of Man, Alderney, Guernsey and Sark, Jersey is provided separately. The scope od information and documentation which are required for registering depend on the form of your company. The process of registration and every change of your company details are chargeable. Limited Liability Company in the UK – the business activity in the UK. In this kind of business there are two groups of partners: general partners – that run a business and are responsible for its liabilities without any limitations and limited partners – their responsibility is limited to the amount of their private contribution which was made to company. These partners are not responsible for running the business.
IMPORTANT! The company which gains its legal personality on the basis of registering has to send to Companies House an annual information about any changes that have been implemented in the company.
The process of registering – business activity in England
After opening your company in the UK, you have to register it in Companies House which wiil issue you with the Certificate of Incorporation. If you are starting your business as a self-employed in the UK, there is no need to register in Companies House. To register your Limited Company in Companies House, you have to provide the following documents:
– Memorandum of Association – in this paper are included some main information about your company (its name, address, main goals and the field of business activity in the UK, the declaration about imited liability, the amount of initial capital and its apportionment). Memorandum also acts as the agreement of association and status of your company
– Articles of Association – all rights of shareholders are included in this document. also you can find there information about dividends, providing spare resources, transfering shares, procedure of organising the extraordinary general meeting of shareholders. There is no limitations in the UK in the field of working in the UK as a member of newly accessed EU Member State. Therefore, if you are a business owner in the UK, you can employ both British and Polish workers. Somebody who is working in the UK is obliged to register under the Worker Registration Scheme in the proper Internal Ministry. In the Uk, there are not limitations in buying properties by foreigners. But, every building which is treated as a business-based building, should be issued with a special certificate about providing an appropriate level of fire safety in the building.