corpus/uk.md

# United Kingdom
as_of: 2026-08 (verify rates before relying on them)

## Entity types
- **Private Limited Company (Ltd)** — the default. 1 director minimum, **no residency requirement**, no company secretary required.
- **LLP** — professional services partnerships.
- **PLC** — public markets only.

## Tax
- Corporation tax: **25%** main rate; **19%** small-profits rate (profits <£50k); marginal relief between £50k–£250k.
- VAT: **20%** standard. Registration threshold £90k turnover.
- Capital gains for founders: Business Asset Disposal Relief (BADR) — reduced CGT rate of **18%** (since 2026-04; was 14% in 2025-26) on first £1M lifetime gains. Standard CGT 24% above.
- Dividend tax on shareholders (8.75%–39.35% by band).
- Employer NIC 15% (from 2025-04) above small thresholds — a real payroll cost.
- **R&D relief (merged scheme, from Apr 2024):** ~20% expenditure credit (net ~15–16p/£ after tax); loss-making R&D-intensive SMEs (≥30% R&D spend) get enhanced ~27% via ERIS.
- Patent Box: 10% rate on patent-derived profits.

## Investment incentives (the UK's superpower)
- **SEIS**: investors get 50% income-tax relief on up to £250k company raise + CGT exemptions. Company <3 yrs, <£350k assets.
- **EIS**: 30% relief, up to £5M/yr (£12M lifetime) company raise.
- These make UK angels dramatically easier to close — SEIS/EIS eligibility is often the deciding factor for UK incorporation.
- **EMI options**: highly tax-favored employee options (CGT instead of income tax, BADR rate possible) — the best startup option scheme of the five regions.

## Setup & maintenance
- Incorporation: Companies House, **~24 hours, £50**. Cheapest and fastest of the five.
- Identity verification for directors/PSCs mandatory (from 2025, ECCT Act).
- Annual: confirmation statement (£34), accounts filing, CT600 tax return. **Audit exempt** if small (2 of: turnover <£10.2M, assets <£5.1M, <50 staff). Small-company filing exemptions being tightened (profit & loss filing required under ECCT reforms — verify timing).
- PAYE/pension auto-enrolment once employing.

## Foreign ownership & money movement
- 100% foreign ownership, no exchange controls, free repatriation.
- No residency requirement for directors or shareholders — genuinely remote-incorporable.
- NSIA (National Security and Investment Act): mandatory clearance for acquisitions in 17 sensitive sectors (AI, quantum, dual-use...) — matters at exit/fundraise from foreign state-linked buyers.

## Banking
- Fintechs (Tide, Revolut Business, Wise) onboard UK companies fast; high-street banks slower. Non-resident-director companies face more friction but it's workable.

## Compliance & regulatory
- UK GDPR + Data Protection Act — full GDPR-grade regime.
- FCA for fintech: credible but slow (e-money/payment licenses 6–12+ months); FCA sandbox.
- Employment law: employee-protective (unfair dismissal after 2 yrs — day-one rights under the Employment Rights Act 2025+ being phased in — verify).

## Grants
- Innovate UK: Smart Grants (£25k–£2M), sector competitions — substantial non-dilutive funding, open to UK-registered companies.
- R&D credits (above) function as quasi-grants for loss-makers (payable credit).
- British Business Bank programs; regional funds.

## Best for
- Companies raising from UK/European angels (SEIS/EIS) and VCs.
- R&D-heavy startups (R&D credit + Patent Box + Innovate UK stack).
- Founders anywhere wanting a cheap, fast, credible, fully-remote entity serving UK/EU customers.

## Negative cases
- Post-Brexit, a UK Ltd gives no EU single-market rights (no passporting; may still need an EU entity/VAT registrations for EU trade).
- US-VC-track startups: same Delaware-flip pressure as everywhere.
- High-profit owner-managed businesses: 25% CT + dividend tax stacks worse than UAE/SG.

## Hiring & payroll
- Employer costs: NIC 15% above ~£5k/yr threshold, pension auto-enrolment minimum 3%, apprenticeship levy at scale. Load ~18% — the heaviest statutory payroll burden of the five.
- Employment rights are strong and strengthening (Employment Rights Act 2025 phases in day-one unfair-dismissal protection — verify current state). Redundancy requires process + statutory pay.
- IR35: engaging UK contractors through personal service companies shifts employment-status risk to the hiring company (medium/large cos).
- **EMI options offset much of this**: qualifying employees pay no tax at grant or exercise (strike ≥ market value), CGT (potentially BADR 18%) at sale — materially better than US NSOs or Indian ESOPs. Companies <£30M assets, <250 staff qualify.

## Founder personal tax
- Income tax to 45% (+2% employee NIC); dividends to 39.35%; CGT 24% standard, BADR 18% (since 2026-04) on first £1M lifetime.
- The remittance-basis "non-dom" regime was abolished 2025-04 — replaced by a 4-year foreign-income exemption for new arrivals (FIG regime). Founders relocating *to* the UK get 4 clean years; founders leaving the UK face temporary-non-residence rules (gains taxed if back within 5 years).
- UK-resident founders holding foreign companies: CFC rules + transfer-of-assets-abroad rules mean a UAE/SG shell run from London is UK-taxable — the corpus cross-border priority applies.

## Exit & M&A
- Trade sales: share-for-share exchange rollover lets founders defer CGT when acquired for acquirer stock; earn-outs partly CGT-treatable with structuring.
- Substantial Shareholding Exemption: UK corporate sellers of ≥10% trading-company stakes pay no CT on the gain — makes UK holdcos clean group-sale vehicles.
- SEIS/EIS investors' gains are CGT-free at exit (3-yr hold) — helps close angels but also means your cap table fights structure changes that break relief.
- London's acquirer/PE pool is deep; AIM/LSE listings possible but most UK tech IPOs now consider NYSE/Nasdaq — pre-IPO US re-domicile is common at that stage.