A Foreigner’s Guide to Starting a Business in the UK [2025]

The UK is a top destination for entrepreneurs, offering a thriving business environment and global market access. London alone is home to almost 1 million private businesses, from fast-growing startups to multinational enterprises.[1]

While setting up a business as a foreigner is possible, it comes with challenges. Navigating visas, tax obligations, and local laws can give you a headache, even for seasoned business owners. This guide walks you through every step, ensuring you have everything in place to register your business in the UK.

Typically, foreigners can set up and own a UK private limited company (Ltd) without needing UK citizenship or residency. There are no restrictions on foreign ownership when registering a business with Companies House. However, if you plan to physically operate your business in the UK or enter the country for business activities, you may need to apply for a relevant work visa. 

Innovator Founder Visa

If you plan to set up and run an innovative business that is truly unique in the market, you can apply for the Innovator Founder Visa (previously Innovator Visa) to conduct business activities in the UK. This visa allows you to stay for up to 3 years, with the option to extend or apply for settlement (indefinite leave to remain) if you meet the requirements.[2]

To be eligible, your business must:

• Be new: You cannot join an existing business that is already trading.
• Be innovative: Your business idea must be original and different from anything currently on the market. It must also receive an endorsement from an approved endorsing body.[3]
• Be scalable: You must provide a business plan demonstrating job creation and potential growth in national and international markets.

You can apply for this visa online by providing the following documents:[4]

• A valid passport or other document proving your identity and nationality.
• Bank statements that show you have at least GBP 1,270 in savings for at least 28 consecutive days before applying.
• Proof of English language proficiency at CEFR Level B2 or higher.
• Tuberculosis (TB) test results, if required, based on your country of residence.

The visa fee is GBP 1,191 per person if applying from outside the UK and GBP 1,486 if extending or switching within the UK (excluding the healthcare surcharge). A decision is typically made within 3 weeks for applications from outside the UK and 8 weeks for those inside.

An essential step to start a business in the UK, whether as a local or a non-resident, is to choose the type of business structure. The common options for foreigners are:

• Private Limited Company (Ltd): A separate legal entity where owners' liability is limited to their shares.This is the most popular choice for foreign business owners as it is straightforward to manage and offers limited liability protection for personal assets.
• Sole Trader: A simple structure where you run the business as an individual and are personally responsible for all debts and liabilities. This option suits self-employed individuals or small businesses that do not require a formal corporate structure.
• Limited Liability Partnership (LLP): A business structure designed for business partners who want to run a company together while protecting their personal assets. LLPs provide limited liability, meaning partners are not personally responsible for debts beyond their investment, making it a preferred option for consultancies and professional services.

The business type affects your tax obligations as well as the company registration process. Most foreign entrepreneurs opt for a private limited company due to its limited liability protection and credibility in the UK market.
Once you have decided on the type of your business, prepare the required information and documents accordingly. The requirements for setting up a limited company at Companies House include the following.

Company Name

The company name cannot be the same as an existing company or trademark. If registering a limited company, the name must end in either "Limited" or "Ltd" or the Welsh equivalents "Cyfyngedig" or "Cyf" if registering in Wales. You can check the availability of the business name on the UK government website.[5]

Registered Office Address

You must have a physical address in the UK, which should be located in the same country where your company is registered. For example, if you register a company in Scotland, your registered office must also be in Scotland. The address cannot be a PO Box.

A registered office address is crucial, especially when opening a business bank account. Banks often require proof of address, and official correspondence from Companies House and HMRC may be sent there. 

Company Officers and People with Significant Control

The people involved in your business play a key role in its registration and management. You will need to appoint the following:

• At least one director who must be over 16 years old. The director does not need to live in the UK, but they must provide a UK-registered address.
• At least one shareholder or guarantor who can also be a director. 
• A Company secretary is not required, but you may appoint one. However, a company secretary cannot also serve as the company’s auditor.

Additionally, you must identify People with Significant Control (PSC) in your company. These are individuals who have the power to make key company decisions or hold more than 25% of shares. 

Memorandum and Articles of Association

When registering a private limited company in the UK, you must submit two key documents:

• Memorandum of Association: A legal statement confirming the company’s formation and the agreement of initial shareholders or guarantors to create the business. This document cannot be changed after registration.
• Articles of Association: A set of rules governing how the company operates, including the responsibilities of directors, decision-making processes, and share distribution. You can use standard model articles or create custom ones.

Both documents must be submitted to Companies House and will be publicly available.

Once you have chosen your business structure and prepared the necessary details, the next step is to register your UK company with Companies House, the official registrar of businesses in the UK. The incorporation process is entirely online and can be completed on the government website.[6]

Here’s how the registration process generally goes, step by step:

• Step 1: Create a Government Gateway user ID and password for your company.
• Step 2: Provide company details, including whether it will be a company limited by shares or guarantees, the company name, and the registered office address.
• Step 3: Provide a registered email address for official contact with Companies House.
• Step 4: Appoint company officers, including at least one director and any shareholders or guarantors.
• Step 5: Upload supporting documents, including the Memorandum and Articles of Association.
• Step 6: Pay the GBP 50 registration fee and submit the application.

You will receive a Certificate of Incorporation confirming that your new business legally exists and has been successfully registered.

Typically, you can set up Corporation Tax with HMRC during the company registration process. However, it’s important to understand your tax obligations, as the taxes your business must pay will depend on its legal structure, revenue, and activities. Here are the key taxes that apply to UK businesses. 

If you hire employees, you are responsible for setting up Pay As You Earn (PAYE) and deducting Income Tax as well as National Insurance (NI) from employee wages.

In case you did not register for Corporation Tax when setting up your company with Companies House, you must do so within 3 months of starting business activities. Sole traders can register for Self Assessment tax returns online through the government’s online services.[7]

While non-UK residents and foreign nationals can technically open a business bank account in the UK, the application process is often more complex than for UK residents. This can be particularly challenging for overseas companies or businesses without a physical presence in the country.

Here are some options to consider for foreign business owners:

1. High Street Banks: Traditional banks like HSBC, Barclays, and NatWest offer business accounts but typically require face-to-face verification at a local branch and proof of a UK address.
2. Challenger Banks:  Digital banks such as Monzo and Starling Bank allow businesses to open accounts remotely but may still require the applicant to be a UK tax resident with a valid address.
3. Fintech Solutions: Non-bank providers like Wise Business offer more accessible alternatives, often with multi-currency accounts for businesses handling international transactions.

Starting your own business is already challenging, but doing it in another country as a foreign entrepreneur comes with additional difficulties. From meeting legal requirements to navigating banking and tax obligations, the process can be complex. Below are some common challenges and practical ways to overcome them.

Not only is a physical address required to register a company with Companies House, but it is also typically requested by banks when opening a corporate account. If you do not have a physical office or do not plan to operate from the UK, this can be an obstacle.

Your tax obligations depend on whether your business is considered UK-based or simply operating internationally. Non-residents may need to register for Corporation Tax or VAT, depending on business activities. Additionally, high-income tax rates can be a burden for small businesses.

While you can register a UK company without living in the country, you may need a UK business visa to operate or manage it from within the UK. The application process can be complex, and not all visa types allow foreign nationals to work for their own business, and some require meeting specific sponsorship or investment conditions.

The UK offers a business-friendly environment for foreigners, but setting up a company comes with its challenges. Understanding legal requirements, tax obligations, and banking options is important to ensure it is worth your time and investment.

If the UK’s regulations or residency requirements become too complex or difficult to manage, you may want to explore alternatives like Hong Kong or Singapore, which offer simplified company registration and tax benefits for foreign entrepreneurs. Assessing different jurisdictions can help you find the best fit for your business.