The UK is home to 5.5 million private businesses today. Over a million are micro-enterprises, meaning they employ between one and nine employees. Immigrants play a key role in the country’s private sector. In fact, foreign-born entrepreneurs own roughly 1.4% of all businesses in the UK—and they’re doing well1.
Despite making up a minority of the population, immigrant founders run 39% of the UK’s Top 100 fastest-growing companies. They support local economies, help create jobs, and send money back home using services like Remitly. You could be part of this growth, too. Let’s learn how you can start and run a legal business as a foreigner in the UK.
Can I Start a Business in the UK as a Foreigner?
Foreigners from any country are allowed to open and legally operate businesses in the UK. However, you must have the right visa to support your business activities. You are also required to follow the British legal process to a T, as outlined below.
Key requirements for immigrant entrepreneurs
The UK has stringent regulations about how newcomers can start and incorporate a business. The key requirements are as follows:
- Obtain a visa
A visa is an official document that legitimises your presence or activities in the UK. You’ll need to obtain a UK visa before travel if you fall under any of these categories:
- You come from a country on the Visa national list.
- You are not a citizen of an EU/EEA country or Switzerland.
Foreign nationals must get a visa to live, work, or study in the UK. So, any immigrant looking to incorporate a business locally must apply for a business visa; we’ll go into more detail shortly.
Learn more about UK visas on the official website.
- Get a registered address
All businesses operating in the UK must have a registered address in the country. Work on securing a legal physical location for your business early on.
- Choose the right business structure
Will you run a solo operation or work with trusted business partners? Alternatively, you could opt for the corporate route. Whatever your objectives, the UK offers several legal business structures to choose from.
- Ensure compliance
UK businesses are subject to different regulations on taxes, health and safety, advertising, and data protection. If your idea meets the criteria, you may even need to submit your business plan for evaluation by the UK government to secure funding. As a future business owner, you should brush up on these regulations to ensure compliance. Also, study employment law to keep you and your business covered.
- Define your business plan
Set a clear roadmap for the company by outlining clear, realistic goals. Work out your capital requirements and factor in immigration costs, such as visa application fees. On average, the cost of starting and running a business in the UK is about £22,750 GBP for the first year alone. This includes incorporation, legal, administration, accountancy, and HR fees.
Set aside funds to invest in yourself and your staff, too. Developing business skills such as management, marketing, and consumer insight—in addition to industry expertise—will set your business apart.
Eligibility criteria for non-residents
The Companies Act 2006 allows immigrants to act as company directors. However, only eligible non-residents can register and operate a business legally in the UK. Officials use the following criteria to determine eligibility:
- Company founders must be at least 16 years old
- The founder must provide accurate personal information, such as nationality
- The company must have a registered UK address for correspondence
- The founder must not be legally disqualified from acting as a company director
Business types available to foreigners
UK law also allows immigrant business owners different types of business, including:
- Sole trader
- Partnership
- Limited liability partnership (LLP)
- Limited company
- Franchise
- Community Interest Company (CIC)
- Freelancer or Consultant
Immigrants are allowed to start and operate most businesses in the UK, with a few conditional exceptions. Holders of the Innovator Founder Visa can’t work as professional sportspeople, for example.
Types of Business Visas and Immigration Routes
Before starting the UK business registration process as an immigrant, you must first obtain appropriate visa permissions. Let’s delve a little deeper.
Immigration in the UK
UK immigration policy has evolved over the years to accommodate the country’s economic goals and domestic concerns. Post-war Britain was open to Commonwealth workers, who were brought in to help rebuild the economy. However, in 1962, the UK government imposed travel restrictions, only allowing those with work permits to enter.
In 2008, the UK implemented a point-based immigration system that assessed applications based on several factors. These included salary, English proficiency, and education level, which have to meet certain requirements before a work visa can be issued.
Even more changes happened after Brexit, bringing new immigration rules. One major change was that the UK refined its point-based system to prioritise attracting skilled workers. This aims to help build the country’s STEM sectors.
UK business visas
The immigrant business regulatory landscape has also experienced changes.
- The Entrepreneur visa was introduced to encourage immigrants with business ideas to start, incorporate, and run their businesses in the UK.
- The Investor visa aimed to attract high-value entrepreneurs to the UK by offering settlement options after a set time and investment amount.
- The Start-up visa required founders to prove that a proposed business was innovative, viable, and scalable. Applicants also had to be endorsed by an approved endorsing body, proving that their business idea met the eligibility criteria.
These schemes are now closed to new applicants. However, immigrant business owners who secured the Investor Visa can still extend their stay, invite their families to the UK, and settle for a defined period.
Today, several types of business visas are available to foreigners who want to launch UK-based enterprises:
- Innovator Founder visa: Targets founders with unique business ideas.
- Graduate visa: With this visa, you can stay in the UK for up to two years after graduation, allowing you to pursue freelance or entrepreneurial opportunities.
- Global Talent visa: If you are an endorsed leader in your field, this visa allows you to pursue business interests in research, academia, culture, the arts, or digital technologies.
While not specifically tailored to founders, the Standard Visitor visa offers a Business category. This option allows you to travel to the UK for meetings, conferences, or other business activities. It is valid for up to six months.
Innovator Founder visa explained
The Innovator Founder visa replaced the Start-up Visa in 2023, shifting the UK immigration landscape yet again. This visa is designed for entrepreneurs who want to start innovative businesses in the UK. An endorsing body must certify that the business idea is new, innovative, viable, and scalable before it is eligible under this visa.
Start-up visa holders can still apply for their immediate family to join them in the UK. They can also opt into the Innovator Founder visa when renewing their business visa.
So, what are the requirements for applying for the Innovator Founder visa?
- Endorsement: An endorsing body assesses the business plan. Find a list of approved endorsing bodies here.
- English proficiency: Founders must be able to read, write, speak, and understand English up to a B2 level.
- Proof of funds: The founder must prove access to adequate personal savings to support their stay in the UK. You should have at least £1,270 GBP in your bank account for 28 successive days.
- Age: The business owner or founder must be at least 18 years old.
The Innovator Founder Visa is valid for three years. However, you’ll need to meet with the endorsing body at 12 and 24 months to show your progress, or your visa could be withdrawn.
Step-by-step Guide to UK Business Registration
Choose a business name
The next stage after obtaining your visa is incorporating the business. But first, settle on a business name. Finding a business name is a process that should be handled correctly to avoid challenges during incorporation. Here’s how to choose an acceptable business name in the UK:
- Ensure your business name choice is usable via the official company name availability checker tool.
- Avoid sensitive words and expressions. The Home Department may need to approve certain words.
This comprehensive, government-provided resource has more information about business names, incorporation, and the agencies to contact for approval of certain words or phrases.
Legal business structures and choosing the right one
Next, decide on the legal structure under which your business will operate. Generally, there are three main business structures available in the UK. Choosing one depends on how comfortable you are at absorbing liabilities, as well as the ease of registration.
Sole trader
Under this structure, there is no legal difference between the founder and the business. Instead, you assume full liabilities at a personal level.
To register as a sole trader in the UK:
- Settle on a business name. Owners can trade under their names.
- If necessary, register a trademark.
- Open a business bank account.
- Register with the HM Revenue & Customs (HMRC). The body is responsible for overseeing payments, taxes, and customs in the UK.
- Apply for a Unique Taxpayer Reference (UTR) number.
- If necessary, apply for self-assessment. This is usually a requirement for sole traders who earn more than £1,000 GBP in a financial year before deducting expenses.
- Obtain all licences and permits to remain compliant.
- Maintain a good record of accounts.
- Pay taxes.
Partnership
Two or more people sharing profits can register a partnership in the UK under the Partnership Act 1890. There are three main partnership types:
- General or ordinary partnership: This type of partnership has a simple structure but doesn’t create a separate legal entity. The business partners are fully liable.
- Limited partnership: At least one general partner has unlimited liability and manages the business. Meanwhile, at least one other limited partner has limited liability and doesn’t participate in management, but contributes capital.
- Limited liability partnership: This partnership has at least two designated partners who enjoy unlimited liability.
The registration process is similar to sole traders, with a few differences:
- Registration with HMRC for self-assessment is mandatory.
- Each partner must file a separate tax return and register for self-assessment.
- All partners are equally liable for any business issues, such as debts.
- Limited partnerships must appoint general and limited partners. They also register with Companies House.
- Limited liability partners are separate legal entities from the business. So they aren’t liable for debts and other issues but share the profits.
Limited company
Also known as private limited companies, these enterprises are legally separate from their owners—shareholders—and the directors who are appointed to run them.
Limited companies making a profit register as limited by shares, while those not-for-profits are limited by guarantee.
Register with Companies House and HMRC
All immigrant businesses in the UK must register with HMRC. However, only limited partnerships and limited companies register with Companies House.
Opening a Business Bank Account
Enterprises registered with Companies House must open a business account in the UK. Although sole traders aren’t required to open a business account, it is a prudent choice.
A business account helps to separate personal finances from business finances. Additionally, some banks don’t allow business transactions on personal accounts.
Requirements for immigrant entrepreneurs
Immigrant entrepreneurs must meet several requirements before opening a bank account in the UK. You’ll have to provide the following:
- A valid UK visa
- Proof of UK address
- A valid passport
- Documents detailing business activity, such as endorsement from an authorized endorsement body
- Some banks also require English language proficiency to reduce the risks of fraud and scams, miscommunication, or abuse.
Choosing the right banking partner
How do you find the right banking partner in the UK? Seek out financial institutions that offer tailored services and products for immigrants. That way, you can remain compliant with business regulations while properly managing your finances.
Look out for these offers and characteristics:
- Money management tools
- Travel wallet
- Insurance packs
- Little to no sending fees for safe international transfers
- Mobile banking
- Immigrant-friendly products
- Affordable foreign currency accounts
Legal and Tax Obligations
Immigrant business owners are also subject to legal and tax obligations in the UK. Let’s explore some relevant British business laws.
Compliance with UK business laws
Complying with UK business laws ensures smooth operations. These are some legal requirements you should be aware of:
- Conducting “Right to Work” checks. All employers and business owners must verify that their employees have the legal right to work in the UK.
- Obtaining a sponsor licence from the Home Office before supplying job offers to skilled workers under the UK’s points-based visa system.
- Keeping accurate records of employees and accounts.
- Paying appropriate wages.
- Reporting employees working illegally.
- Observing data protection laws, such as the General Data Protection Regulation (GDPR)
- Observing anti-money laundering laws.
Understanding tax responsibilities
As a foreign-born founder, your business has certain tax obligations in the UK. For example, you must:
- Pay 20% income tax
- File tax returns with the HMRC
UK Business Registration Made Easy
With all this information, you’re ready to launch a business in the UK, no matter where you are from. You only need passion, deep expertise, and a thorough understanding of Britain’s business and regulatory landscapes to succeed. This way, you will comply with all key requirements—all while creating a future that can support you, your new UK community, and your family back home.
Frequently Asked Questions
Can a non-resident register a business in the UK?
Yes, a non-resident can register a business in the UK. Legal types to register are; sole trader, partnership, and limited company.
Do I need a visa to start a business as a foreigner in the UK?
Yes, immigrants need to obtain an Innovator Founder Visa to start and run a business legally in the UK.