Start a Business in the UK

How to Start and Invest in a Business in the UK

The UK, with its rich opportunities for business expansion, robust healthcare, and world-class education, remains an attractive and promising destination for business owners, investors, and entrepreneurs. Its allure continues to draw individuals from around the globe, offering a hopeful outlook for those considering business ventures in the UK.

However, with the closing of many immigration routes, such as the UK Investor visa and Entrepreneur visa, navigating the intricate UK immigration rules and regulations can be daunting. We understand that finding a solution that works for you can sometimes appear impossible, but we’re here to help.

The Home Office has set high standards, making it challenging for business owners to invest or start their ventures. This guide will help you understand the process and position yourself as an expert.

Eligibility Criteria for UK Business Visas

Before applying for a UK business visa, it’s crucial to understand the eligibility criteria. Here are the primary visa routes and their requirements:

UK Self-Sponsorship Visa

The UK Self-Sponsorship visa is a pathway rather than a visa category, allowing entrepreneurs to establish or expand their businesses. Steps include:

Register or purchase a company in the UK.
The UK business establishes a ‘trading presence’.
Obtaining a Skilled Worker Home Office Sponsor Licence for your business.
Applying for a Skilled Worker visa to be employed in your business in the UK.
Adequate resources to support your business, with a recommended investment of £25,000 or more.
A British/settled person to act as the Authorising Officer and Level 1 user for the Sponsor Management System (SMS), the Home Office system to manage the licence.
English language proficiency.

Advantages

Control: Complete control over your business operations.
Flexibility: No strict minimum investment requirement, allowing for various business sizes.
Path to Residency: Potential pathway to permanent residency through the skilled worker visa.

Disadvantages

Complex Process: Requires navigating both sponsor licence and visa applications.
Trading Presence: It can be challenging for some businesses to establish a trading presence in the UK before the key personnel enter the country. However, since April 2024, this has been a key area of focus for the Home Office caseworkers.
British/Settled Authorising Officer Requirement: Identifying a suitable person to fill the positions of Authorising Officer and a Level 1 user can be challenging and a barrier for many.
Financial Commitment: Need to demonstrate sufficient funds and resources.
Administrative Burden: Ongoing compliance with sponsor licence requirements.

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UK Expansion Worker Visa (Global Business Mobility)

The UK Expansion Worker visa is designed for senior managers or specialist employees to set up an overseas business’s UK branch or subsidiary.

While it doesn’t lead to permanent residency, the Expansion Worker visa allows employees (you) to stay for one year with an option to extend for a further year. During this time, the business should become sufficiently established to apply for a Home Office Sponsor Licence and for you and any employees to switch to the Skilled Worker visa, leading to settlement. Eligibility includes:

A valid Certificate of Sponsorship (CoS) from your employer.
Employment with the sponsoring company outside the UK.
Meeting the minimum salary requirements.
Sufficient financial resources to support your stay.
Job listed in the eligible occupations in the UK.

Advantages

Business Expansion: Facilitates the establishment of a UK branch for overseas companies and enables the business to establish a ‘trading presence’ in the UK – a key requirement for the Skilled Worker Sponsor Licence.
Skills Transfer: Allows key personnel to bring their expertise to the UK.
Flexibility: Initial visa duration of up to 12 months, extendable for another 12 months.
Visa Switching: Allows visa holders to switch to other work visa categories (for example, the Skilled Worker visa) from within the UK to extend their stay or for a permanent move.

Disadvantages

Business Expansion: Facilitates the establishment of a UK branch for overseas companies and enables the business to establish a ‘trading presence’ in the UK – a key requirement for the Skilled Worker Sponsor Licence.
Skills Transfer: Allows key personnel to bring their expertise to the UK.
Flexibility: Initial visa duration of up to 12 months, extendable for another 12 months.
Visa Switching: Allows visa holders to switch to other work visa categories (for example, the Skilled Worker visa) from within the UK to extend their stay or for a permanent move.

UK Innovator Founder Visa

The UK Innovator Founder Visa is an option for entrepreneurs and business leaders. This visa requires applicants to have a unique and innovative business idea. The eligibility criteria include:

A new, viable, scalable, and innovative business idea.
English language proficiency (CEFR Level B2).
Applicant must be over 18 years of age.
Sufficient funds to maintain themselves and invest in their business.
An endorsement from a relevant body.

Advantages

Innovation Focused: Encourages innovative business ideas, which can lead to unique market opportunities.
Clear Path to Residency: Provides a structured route to permanent residency.
Support and Endorsement: Access to endorsing bodies which can provide valuable business support and networking opportunities.

Disadvantages

High Barriers to Entry: Strict requirements can be difficult to meet.
Endorsement Requirement: Finding and securing an endorsement can be challenging.
Maintenance of Standards: Continuous compliance with innovation and business viability standards is required.

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Choosing the Right Business Structure

Setting up a business in the UK involves choosing the appropriate business structure. Here are some of the options:

Sole Trader

Quick and simple to set up.
Suitable for individuals who want full control over their business.
Fewer regulatory requirements compared to other structures.

Advantages

Simplicity: Easy to establish and manage.
Full Control: Owner has complete control over business decisions.
Cost-Effective: Lower setup and operational costs.

Disadvantages

Unlimited Liability: The owner is personally liable for business debts.
Limited Growth Potential: It may be harder to raise capital and expand.
Less Credibility: This may be perceived as less credible than incorporated entities.
Unsuitability: It is unlikely to meet the requirements for UK immigration and visa purposes.

Limited Company (Ltd)

Provides limited liability protection, separating personal assets from business responsibilities.
Attracts more credibility and potentially more investment.
More administrative responsibilities and compliance requirements.

Advantages

Limited Liability: Protects personal assets from business debts.
Credibility: More credible to investors, customers, and suppliers.
Growth Potential: Easier to raise capital and expand.

Disadvantages

Administrative Burden: More complex setup and ongoing compliance requirements.
Costs: Higher setup and operational costs.
Regulatory Requirements: Must comply with Companies House regulations and file annual reports.

Partnerships (LLP)

Allows for shared responsibilities and resources.
Combines the skills and expertise of multiple individuals.
Profits and liabilities are shared among partners.

Advantages

Shared Responsibility: Partners share the workload and decision-making.
Combined Skills and Resources: Benefits from the diverse expertise of partners.
Cost-Effective: Lower setup costs compared to a limited company.

Disadvantages

Unlimited Liability: Partners are personally liable for business debts.
Shared Profits: Profits must be shared among partners.
Potential for Disputes: Differences in opinions and goals can lead to conflicts.

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Registration and Incorporation Process

The process varies depending on the chosen business structure:

Sole Traders must inform HMRC about their business and may need to register a business name if it differs from their own.
Limited Companies need to register with Companies House, choose a unique business name, and prepare comprehensive documentation regarding the business purpose and structure.
Partnerships require an agreement on terms of partnership but do not need formal registration.

Developing a Viable Business Plan for UK Immigration and Visa Purposes

A successful business plan should focus on innovation, viability, and scalability. Key elements include:

Innovation: Unique aspects that differentiate your business from competitors. Innovation can come from new products, services, or business models. This is critical for the UK Innovation Founder visa.
Viability: Realistic financial projections and a sustainable business model. This includes understanding your market, customer needs, and how you will generate revenue.
Scalability: Plans for growth and expansion to meet market demands. Consider how your business can grow without being constrained by operational limitations.

Tips for Crafting a Persuasive Business Plan

Market Research: Conduct thorough research to understand your industry, target market, and competition.
Clear Objectives: Define clear business objectives and how you plan to achieve them.
Financial Projections: Provide detailed financial forecasts, including income statements, cash flow projections, and break-even analysis.
Marketing Strategy: Outline your marketing and sales strategies to attract and retain customers.
Risk Management: Identify potential risks and how you plan to mitigate them.

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Securing an Endorsement

For the Innovator Founder Visa, obtaining an endorsement is crucial. This involves:

Identifying an Endorsing Body: Find a body relevant to your business sector that can endorse your business idea.
Demonstrating Business Viability: Show that your business idea is viable, scalable, and innovative.
Meeting Endorsement Criteria: Ensure you meet all the specific requirements the endorsing body sets, including business plans and financial projections.

Investment Requirements

Understanding the financial commitments is essential:

Minimum Investment Thresholds: Different visa categories have varying requirements. Ensure you understand the specific financial criteria for your chosen visa route.
Acceptable Sources of Funds: Funds must come from legitimate sources such as savings, income, investments, property, or loans. Document the source of your investment to meet visa requirements.
Venture Capital and Angel Investors: Seeking investment can provide the necessary capital in exchange for equity. Identify potential investors who can contribute to your business growth.
Government Grants and Support: The UK government offers various schemes to support new businesses. These can provide financial assistance, mentorship, and resources to help your business succeed.

Establishing a Physical or Virtual Presence

Choosing the right business location is vital. Consider factors like:

Physical Location: Proximity to markets, availability of resources, and business environment. Select a location that offers the best opportunities for your business type.
Virtual Office: A cost-effective way to establish a UK presence. Virtual offices provide a professional address and communication services without the cost of physical office space. It is recommended that the virtual office has the option to rent desk space and meeting rooms so that this can be used as a work location.
E-commerce and Digital Strategies: Leveraging digital platforms for business growth. Developing a robust online presence can expand your market reach and improve customer engagement.

Application Process and Documentation

The application process involves:

Visa Application: Filling out the relevant forms and meeting the eligibility criteria. Ensure all information is accurate and complete to avoid delays.
Required Documents: Valid passport, endorsement letter, bank statements, and a comprehensive business plan. Collect and prepare all necessary documents to support your application.
Professional Assistance: Consider seeking help from immigration advisers such as us here at Immtell to navigate the complex application process and increase your chances of success.

Navigating the UK Business Environment

Understanding the UK market dynamics and legal requirements is crucial:

Market Research: Gain insights into your industry and competitors. Stay informed about market trends, customer preferences, and emerging opportunities.
Regulatory Compliance: Ensure your business adheres to UK laws and regulations. This includes understanding tax obligations, employment laws, Home Office Sponsor Duties, Right to Work legislation and sector-specific regulations.
Networking: Connect with other business owners, industry experts, and potential partners. Networking can provide valuable insights and opportunities for collaboration.

Pathway to Permanent Residency

Transitioning from a business visa to Indefinite Leave to Remain (ILR) requires:

Continuous Residence: Typically, five years of continuous residence in the UK. Ensure you meet the residency requirements and maintain a genuine connection to the UK.
Life in the UK Test: Proving your knowledge of British life, language, and culture. Prepare for and pass this test as part of your ILR application.
Sustainable Business: Demonstrating the viability and success of your business. Provide evidence of business growth, financial stability, and contributions to the UK economy.

Maintaining Your Status and Preparing for ILR

To ensure a successful ILR application:

Ongoing Compliance: Stay current with immigration rules and business regulations. Review your status regularly to ensure you meet all ongoing requirements.
Professional Advice: Seek assistance from regulated immigration consultants like us at Immtell to navigate the application process smoothly. Professional advice can help you avoid common pitfalls and ensure a successful outcome.

How can Immtell Help?

Starting and investing in a business in the UK is a complex yet rewarding journey. Selecting the right business visa and understanding the requirements can pave the way for successful business growth and residency in the UK.

Consulting with experts like our team at Immtell ensures compliance and maximises your chances of success.

Our Solutions:

Business plans for Home Office Sponsor Licences and ongoing operations.
Create HR policies and procedures to allow your organisation to fulfil its Home Office duties as a licenced sponsor.
Company formation and registration for tax and VAT with HMRC
UK Business bank account opening – crucial for the Self Sponsorship visa
Provide British or Settled consultants to act as a Company Director to fulfil the positions of Authorising Officer and Level 1 user – allowing you to get up and running in the UK quickly.

Make sure to evaluate all visa options, understand their advantages and disadvantages, and prepare thoroughly for each step of the process. With the right approach and guidance, you can establish a thriving business in the UK and secure permanent residency. Contact Us to get started or call +44 20 3910 6641.