How to Set Up an Entity in the UK

The United Kingdom remains one of the most attractive jurisdictions in Europe for establishing a corporate presence. Its stable legal framework, access to capital markets, and international credibility make it a popular choice for startups and established firms alike. However, post-Brexit policy changes and evolving tax rules mean that entity setup is not always fully plug-and-play: you must reckon with compliance, tax registration, and the UK’s specific payroll and employment obligations.

In practice, registering a company in the UK is relatively streamlined, especially for private limited companies, but navigating corporation tax, payroll obligations, and ongoing reporting can pose challenges. The key benefits include limited liability, direct employment relationships and tax planning flexibility. The main hurdles are understanding UK-specific taxes (like National Insurance), ensuring timely annual filings, and meeting employment compliance.

Disclaimer: This content is for informational purposes only and does not constitute legal, tax, or financial advice. Always consult official sources before acting.

What does “opening an entity” mean in the UK?

Opening an entity in the UK typically means incorporating a company (most often a private company limited by shares) with Companies House and registering it for tax purposes with HM Revenue & Customs (HMRC). Once incorporated, the entity becomes a separate legal person that can enter into contracts, hire employees, open bank accounts, and own assets.

Entity overview in the UK

Below is a summary comparison of key features of entity setup in the UK:

Step-by-step guide: How to open an entity in the UK

Step 1: Choose the right structure

The most common choice for foreign investors is a private company limited by shares (Ltd), which offers limited liability, flexible capital structure, and relatively simple governance. A public limited company (PLC) is suitable if you plan to raise capital publicly, but it involves stricter rules and a minimum share capital of £50,000. A limited liability partnership (LLP) can suit professional services or arrangements with flexibility, but it is usually tax-transparent and not suitable when you want a classic corporate entity taxed at the corporate level.

Step 2: Verify business name availability

You must ensure your proposed company name is not already taken or too similar to an existing company. Use the name search tool on the official Companies House website. The name must also comply with naming rules (cannot be offensive, must end with “Limited” or “Ltd,” avoid restricted terms without approval). You reserve the name during incorporation; there is no separate reservation step.

Step 3: Prepare incorporation documents

You will need to assemble the following:

• Memorandum of Association: A simple document signed by the initial shareholders to form the company
• Articles of Association: Internal rules of your company (you can use standard model articles or customized ones)
• Statement of Capital & Initial Shareholdings: Detailing share classes, number, nominal value, paid/unpaid amounts
• Statement of Proposed Officers: Names, residential addresses, and roles (directors, company secretary, if any)
• People with Significant Control (PSC) information: Identifying any shareholder or controller with >25 % share or voting rights
• Registered Office Address: It must be in the UK
• Identification documents for directors & shareholders: Certified passport/ID, proof of address (e.g., utility bill).
• Statement of compliance: This is to confirm you meet statutory requirements.

You can download the official incorporation Form IN01 (if filing by post) from the Companies House site.

Step 4: Register with Companies House

Submit your incorporation application either via the government online service or by post using Form IN01. Online applications are typically processed within 24 hours (or up to a few business days), while postal applications take 8–10 days. Once approved, you receive a Certificate of Incorporation, a company number, and the company is officially registered.

Under the new regime, identity verification is being phased in for directors and PSCs under the Economic Crime and Corporate Transparency Act (ECCTA 2023); from 18 November 2025, identity verification will be mandatory for new directors and PSCs.

Step 5: Register for tax and social security

Once incorporated, you must register the company for Corporation Tax via your HMRC business tax account within three months of starting to trade. Sign up for other HMRC online services via your business tax account.

If your turnover (for taxable goods/services) exceeds £90,000 in a rolling 12-month period (as of 1 April 2024), you must register for VAT with HMRC.

When hiring employees, you must register as an employer with HMRC (Payroll Online / PAYE) before the first payday to obtain a PAYE reference.

Step 6: Open a corporate bank account

After incorporation, you can open a business bank account in the UK. Banks will require the company certificate, proof of company address, identification for directors and beneficial owners, and perhaps a business plan or nature of business. Some banks may require local presence or a UK address and may conduct stricter KYC checks for companies incorporated from overseas. This step may take a few days to a few weeks, depending on the bank and the client’s profile.

Step 7: Set up payroll and employment compliance

To hire legally in the UK, you must:

• Operate PAYE (Pay As You Earn) to deduct income tax and National Insurance contributions (NICs) from employees’ wages.
• Pay employer NICs (secondary contributions) on employee earnings above the threshold; current employer NIC rates are generally 15 % on earnings above £175 per week (subject to nuance by category)
• Issue payslips, maintain records, and report payroll in real time to HMRC before each payday.
• Provide statutory benefits (e.g., pension auto-enrollment, maternity/paternity leave, holiday pay, sick pay, workplace pension contributions).
• Use compliant employment contracts, adhere to UK employment law (working hours, termination, notice periods, data protection, etc.).
• Register for and pay into pension schemes (auto-enrolment) if applicable.

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Post-registration obligations

After incorporation, your entity must maintain ongoing compliance to avoid penalties and operational risks. Key obligations include:

• Tax and financial reporting: File annual Corporation Tax returns to HMRC (even if no tax due) and annual accounts to Companies House under UK GAAP or IFRS, depending on size.
• Confirmation statement & corporate registers: Annually file a confirmation statement to Companies House, confirming details of directors, shareholders, registered office, and PSCs. Update those details whenever changes occur.
• Corporate registers: Maintain internal registers (director, secretary, share transfers, PSC) and make them available for inspection.
• Compliance calendar & tracking: Use reminders or a system to track deadlines (accounts, confirmation statements, VAT returns, tax payments, payroll filings).
• Licenses and renewals: Depending on industry, maintain any required licenses, permits, or professional registrations (e.g., financial services, import/export, regulated trade).
• Recordkeeping: Retain accounting, payroll, contracts, transaction records generally for six years (tax/audit purposes) or as required by sector.
• Employment compliance: Continue to comply with labor, pension, benefits, and data protection laws, and report changes in employment status as required by law.

Taxes and financial considerations

Here are the key tax and financial points to understand when operating a UK entity:

• Corporate income tax: The main rate is 25% on profits above £250,000; small profits up to £50,000 are taxed at a lower rate (currently 19%), with marginal relief for profits in between.
• VAT: Standard VAT rate is 20%, with reduced (5%) or zero rates for specific goods/services. You must register once taxable turnover exceeds £90,000 in any 12-month period.
• Payroll / social contributions: Employers pay National Insurance (employer NIC) plus other contributions. Employees also pay NIC and income tax through PAYE.
• Accounting standards: Most small-to-medium companies use UK GAAP (FRS 102 or FRS 105); larger companies or those with investors may adopt IFRS (International Financial Reporting Standards).
• Allowances and reliefs: The UK offers various reliefs (e.g., R&D tax credits, capital allowances, patent box, creative industry reliefs) that companies may claim.

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Expand internationally with Deel

Whether you’re hiring through an EOR or establishing your own local entity, Deel’s all-in-one platform gives you everything you need to expand into the United Kingdom—quickly, compliantly, and with confidence. From market entry to ongoing operations, Deel helps you hire, onboard, and manage teams seamlessly from day one.

With Deel, you can:

• Test new regions using Deel’s local entities through our Employer of Record service—hire employees compliantly, delegate payroll and taxes, and access localized employment contracts.
• Open entities with Deel Entity Setup, where our team manages everything—from incorporation and tax registration to coordination with local experts.
• Centralize your compliance and records with Deel Entity Management, including automated filings, calendar reminders, and visibility across all entities.
• Integrate with Deel Payroll and Deel HR for compliant payments, benefits, and workforce oversight—all in one platform.

For companies transitioning from the EOR model to owned entities, Deel ensures a smooth handover and consistent compliance every step of the way. Enter new markets, onboard talent, and manage your global workforce—all through one unified platform.

FAQs

How long does it take to open an entity in the UK?
Typically, 1–5 business days via online incorporation, or around 8–10 days if submitting by post (using form IN01).

What is the minimum capital required?
For private limited companies, no minimum capital is required. Public limited companies require an allotted share capital of at least £50,000.

Can foreign companies own 100 % of an entity in the UK?
Yes—foreign investors can fully own UK private companies. There is no local ownership requirement.

Do I need a local director or representative?
No. Directors need not reside in the UK. But the company must have a UK-registered office address. Under the ECCTA 2023 regime, identity verification will be mandatory for new directors and PSCs starting 18 November 2025.

How much does it cost to register an entity?
Online registration is typically £50; postal applications cost £71. Additional costs include agent fees, certified document processing, registered office services, and identity verification. Check our Entity Setup Calculator to estimate costs for your specific case.

Can I hire employees before the entity is fully registered?
Generally, no—you need the legal entity, PAYE registration, and payroll setup in place. However, Deel’s Employer of Record (EOR) service allows you to onboard and pay talent immediately while your entity setup is in progress.

Can Deel help me open an entity in the UK?
Yes. Deel Entity Setup manages the end-to-end process — from registration to payroll compliance—in over 100 countries. Deel’s local experts handle documentation, filings, and legal requirements on your behalf.

Does Deel offer ongoing compliance and payroll support?
Yes. Deel offers both managed services and self-service tools to help you stay compliant. If you’re using Deel Entity Management, our team handles payroll, benefits, filings, and compliance obligations on your behalf. If you manage your own entity, Deel Compliance Hub makes staying compliant simple by providing real-time regulatory updates, risk alerts, and workforce insights across 150+ countries.

Can I switch from Deel EOR to my own entity later?
Yes. Deel supports seamless transitions when you’re ready.