Starting your own business in the UK can be hugely exciting, but there’s a lot of work you need to do first to get your business off the ground.
So, if you’ve got your business idea and are ready to get started, follow our comprehensive guide to give you the best chance of success.
Choosing the right business structure in the UK
Your first step is to choose a business structure. There are several different business types in the UK and which one you pick will impact how your business is taxed and how much tax you’ll pay.
Setting up as a sole trader is the simplest option. This means you run the company and make all business decisions yourself (although you can hire employees), and you keep any after-tax profits. However, your personal and business finances won’t be considered separate, which means you are personally responsible for any debts your business takes on.
If you’re setting up your business with someone else, you can set up a partnership. This means you’ll share responsibility for your business’ debts and profits.
Alternatively, you could set up as a limited company. This means your personal and business finances will be completely separate and you’ll pay corporation tax on your profits.
How to register your business in the UK
Once you’ve decided on your business structure, you’ll need to register your business with His Majesty’s Revenue & Customs (HMRC).
Sole traders need to register for self-assessment with HMRC before 5 October in their second trading year. You can do this through the gov.uk website and you’ll need to create a Government Gateway account online.
If you’re registering a partnership, you and your partner(s) must register with HMRC separately, but as part of the same partnership.
Limited companies must register with Companies House. The business needs to have a unique name and a business address. Companies House will inform HMRC when your company is registered.
What you need to know about UK business taxes
The amount of UK business tax you pay and how you pay it depends on your business structure.
If you’re a sole trader, you must submit a self-assessment tax return each year and pay tax on the income you’ve earned, once you’ve deducted any allowable expenses. You’ll also need to pay Class 4 National Insurance if your profits are more than £12,570.
If you’re filing on paper, you must submit your tax return by 31 October for the previous tax year. If you’re filing online, the deadline is 31 January – this is also the date by which you must pay any tax due.
If you’re a partnership, each partner needs to submit a self-assessment tax return, and your tax and National Insurance obligations are similar to those of a sole trader.
Limited companies must pay corporation tax on their profits and submit an annual company tax return and full statutory accounts to HMRC and Companies House. You must register for corporation tax within three months of starting to trade and pay your corporation tax annually and within nine months of the end of your financial year.
If your business has a taxable turnover of more than £90,000 in any 12-month period, you should also register for VAT. This means you must charge VAT on products and services you sell to customers, but you can also reclaim the VAT on items you’ve bought for business use. You’ll need to complete a VAT return each quarter.
Opening a business bank account in the UK
If you’ve set up a limited company, you are required to open a business bank account because your company is a separate legal entity. If you’re not a limited company, you don’t have to open a business bank account. But there are benefits to doing so.
For a start, it can make filing your tax return a lot easier if your business expenses are separate from personal ones. Plus, you can often benefit from features such as invoicing tools that automatically send and chase invoices for you, and accountancy software that can help you streamline your business finances.
Just watch out for monthly account fees and check the eligibility criteria before applying. Your business will usually need to be registered in the UK, and you’ll need to supply your business name and address, proof of ID, and your Companies House registration number if you’re a limited company.
Getting the necessary visas and work permit
If you’re relocating to the UK to run your business, you may need a visa, depending on your nationality. Check the gov.uk website to find out whether you need one.
It’s also worth checking whether you’re eligible for any of the following visas:
Innovative Founder visa. This is for experienced entrepreneurs who have an innovative, unique idea for a business in the UK.
Global Talent visa. You can apply for this if you’re a leader or potential leader in academia or research, arts and culture, or digital technology, and wish to set up a business in the UK.
High Potential Individual visa. If you’ve been awarded a qualification by an eligible university in the last 5 years, you can come to the UK for a fixed amount of time to set up a business on this visa.
UK Expansion Worker visa. If you’re a senior manager or specialist employee at an existing business that’s not in the UK, you can come to the UK on this visa and set up a UK branch.
If you’re only visiting the UK for a short while to sort out your business, you can usually use a Standard Visitor visa. This allows you to stay for up to 6 months to take part in business activities such as attending trade fairs, carrying out site visits and attending training.
How to set up a UK business address
You will need to have an official UK business address to receive all your mail and documentation. It will also be part of your public record. This could be a home address, an office address or something else, as long as it’s a physical location in the UK. It can’t be a PO Box address.
If you don’t want your address to be made public, you can usually find an accountant or solicitor who will let you use their address for a fee.
Hiring employees in the UK as a foreign employer
If you plan to hire employees in the UK, you’ll need to register as an employer with HMRC to receive your Pay As You Earn (PAYE) code.
When hiring staff, you must make sure they have the right to work in the UK and, if they will be working with children or vulnerable adults, you must carry out Disclosure and Barring Service (DBS) checks.
It’s essential to draw up employment contracts for each employee, outlining their working hours, salary, holiday entitlement and benefits. You must also ensure they have a workspace where they can work comfortably.
Navigating the UK’s business laws and regulations
When setting up a business in the UK, it’s crucial to familiarise yourself with the different rules and regulations you’ll need to follow.
Depending on the type of business you want to run, you may need to apply for a licence or permit. For example, a premises licence is needed if you wish to sell alcohol, while you’ll need a licence from your local council if you’re a cafe wishing to set up chairs and tables on the pavement. It’s best to talk to the local council about the different licences and permits you might require.
You should also familiarise yourself with the Consumer Rights Act 2015 which applies when you’re selling products or services on the market, as well as data protection laws which apply if you have access to customers’ or employees’ personal information.
Understanding the UK’s employment and health & safety laws
If you’re hiring employees, staff must be paid at or above the current minimum wage. The National Living Wage for those aged 21 and over is currently £11.44 an hour, rising to £12.21 an hour in April 2025.
Employees also have the right to rest breaks, and contracted employees must receive at least 5.6 weeks of paid holiday. They must also receive sick pay if they earn at least £123 a week and are off work for more than 3 days in a row.
In addition, you must enrol each employee into a workplace pension scheme if they are between 22 years old and the state pension age, and earn at least £10,000 a year.
As an employer, you are legally required to take out employer’s liability insurance. This pays compensation if an employee is injured or becomes ill because of the work they do for you. You can be fined if you do not have this cover in place. But it can also be worth taking out other types of business insurance to protect you and your company.
All UK businesses are required to follow strict health and safety laws. You should carry out a workplace risk assessment, and must have a health and safety policy in place. It’s a legal requirement to display this in a place where your workers can easily read it.
You should also display a list of the first aiders in your building and where to find them, as well as the first aid equipment.
Funding options for foreign entrepreneurs in the UK
If you’re looking for funding for your new business in the UK, you could consider:
A business loan. Here, you borrow a lump sum of cash that you then repay in fixed monthly instalments over a set term.
A start-up loan. If you live in the UK, have the right to work in the UK and you’re setting up a UK business, you may be eligible for the government’s Start Up Loan. This provides borrowing of up to £25,000 per person and is repaid over 1 to 5 years.
A government grant. This is an amount of money awarded to a business to help it grow. Unlike a loan, the money doesn’t need to be repaid. However, grants often have strict eligibility criteria relating to your business size, sector and where you’re based.
Crowdfunding. Here, you collect money from a number of people through online platforms. Some crowdfunding options allow you to collect donations, while others require you to offer a reward, such as a free product, or a share in your business.
Angel investors. These are high net worth individuals who typically prefer to invest in start-up or early-stage businesses. They can also offer their own skills, experience and contacts to help give your business the best chance of success.
Bottom line
If you’re planning to start a business in the UK, there’s a lot you’ll need to consider before you can get your plans off the ground. Crucially, you need to think about the type of business you’re going to run, the taxes you must pay and how you’re going to fund your business.
It’s also important to spend some time familiarising yourself with UK employment and business law so that you don’t get caught out. It can be worth seeking legal help or speaking to an independent financial adviser if you’re unsure of anything.
Frequently asked questions
If you’re hiring employees, it’s a legal requirement to take out employer’s liability insurance. However, other insurance policies worth thinking about include public liability insurance, professional indemnity insurance, business interruption insurance, commercial property insurance and cyber insurance.
A business plan is an important document that outlines what your business does and your future plans. It can be essential if you’re looking to raise funds from investors and it can also give you a clearer idea of what you want your business to achieve and any potential problems you might need to overcome.
You can register a limited company within 24 hours if you do this online. It usually takes around 10 working days to register as a sole trader if you’re in the UK, or 21 working days if you’re abroad.
We show offers we can track - that's not every product on the market...yet. Unless we've said otherwise, products are in no particular order. The terms "best", "top", "cheap" (and variations of these) aren't ratings, though we always explain what's great about a product when we highlight it. This is subject to our terms of use. When you make major financial decisions, consider getting independent financial advice. Always consider your own circumstances when you compare products so you get what's right for you. Most of the data in Finder's comparison tables has the source: Moneyfacts Group PLC. In other cases, Finder has sourced data directly from providers.
Rachel Wait is a freelance journalist and has been writing about personal finance for more than a decade, covering everything from insurance to mortgages. She has written for a range of personal finance websites and national newspapers, including The Observer, The Mail on Sunday, The Sun and the Evening Standard. Rachel is a keen baker in her spare time. See full bio
By switching your business bank account, you may be able to reduce your monthly fees or take advantage of different features like smart bookkeeping tools.
Considering a Revolut Business account? We take a closer look at the features and price plans available with these digital-only accounts.
How likely would you be to recommend Finder to a friend or colleague?
0
1
2
3
4
5
6
7
8
9
10
Very UnlikelyExtremely Likely
Required
Thank you for your feedback.
Our goal is to create the best possible product, and your thoughts, ideas and suggestions play a major role in helping us identify opportunities to improve.
Advertiser disclosure
Finder.com is an independent comparison platform and information service that aims to provide you with the tools you need to make better decisions. While we are independent, the offers that appear on this site are from companies from which Finder receives compensation. We may receive compensation from our partners for placement of their products or services. We may also receive compensation if you click on certain links posted on our site. While compensation arrangements may affect the order, position or placement of product information, it doesn't influence our assessment of those products. Please don't interpret the order in which products appear on our Site as any endorsement or recommendation from us. Finder compares a wide range of products, providers and services but we don't provide information on all available products, providers or services. Please appreciate that there may be other options available to you than the products, providers or services covered by our service.
We update our data regularly, but information can change between updates. Confirm details with the provider you're interested in before making a decision.
