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Advantages of the UK company for international or non-UK resident investors - a summary of the key points:

Why the UK is the leading international corporate domicile:

  • Rapid incorporation
  • No bureaucracy
  • Proportionate costs

Audit exemption criteria for a UK company:

  • Turnover – no more than £6.5 million
  • Gross assets – no more than £3.26 million
  • Rising to £10 million and £5 million in late 2015

Financial benefits of setting up UK companies

  • Generous audit exemption rules
  • Corporation tax just 20% from 2015
  • The July budget announced that CT will reduce to 19% in 2017 and 18% in 2020
  • After reliefs and charges, effective tax rate even lower
  • Usually no tax on foreign dividends
  • Generous credit relief rules
  • Exemption from UK corporation tax on capital gains
  • No withholding tax on dividends paid to non-UK resident shareholders

Relaxed Controlled Foreign Company (CFC) rules

  • Profits of low-taxed subsidiary companies (CFC) treated as the UK company's own profits
  • Legislation now targeted only at the artificial diversion of profits from the UK
  • New CFC rules make the UK tax system more competitive and UK holding companies more attractive
  • CFC rules do not apply even if the foreign subsidiary is set up in a low-tax EU country, provided the subsidiary carries on genuine economic activity in the host state

And finally…

  • Some UK companies are exempt from UK corporation tax altogether (eg LLPs)
  • Such companies must still file UK company statutory accounts
  • Greater transparency eases financing and improves supplier terms

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This issue's author

 Martin Palmer

Martin Palmer
T: +44 (0)117 918 1321

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