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Post-Brexit: Why bother forming and running a UK company?

Debbie Farman is the Director of Legal Practice for Jordans Corporate Law and our Head of Corporate Law. Here she looks at the value of running a UK company post-Brexit.

The reasons for forming a UK company, and doing business in the UK, with contracts drafted under UK law, are virtually the same after the UK/EU referendum vote on 23 June 2016 as before.

These are plentiful and positive; a few of which I’ve set out below. The UK has historically been and “remains” (if I dare use that word), a jurisdiction with a worldwide reputation of having a long-standing, strong and fair judicial system. A vote to stay in or out of the EU does not change that.

Why form a UK company post-Brexit? A few reasons that are as relevant now as they were before :

  • Limited liability: Trading through a UK limited liability vehicle, such as a company or limited liability partnership, provides the protection of limited liability. Under UK law, if the business fails, the creditors have no recourse to the personal assets of the directors (unless they can be proven to have acted negligently or unlawfully) or the shareholders.
  • Succession planning: As a separate entity from its owner, trading through a legal entity assists with succession planning i.e. the company continues regardless of changes in its shareholding.
  • Name protection: Incorporating a company is the only reliable way to protect your business name and prevent others trading on your good name.
  • Low corporation tax: The UK corporation tax rate, currently 20% and falling (scheduled to incrementally decrease over the next few years and be at 17% by 2020), is low compared to many other jurisdictions. Indeed, the current Prime Minister is mooting changing this to 15%, which would be extremely beneficial to many businesses.
  • Fair contracts: Clients and suppliers may perceive, rightly or wrongly, that the business is more stable, more reliable, even more reputable if it is in the form of a limited company and it is formed in the UK under English law. As noted above, the UK has a strong reputation for having a fair and judicial legal system.
  • Trading opportunities: Regardless of the EU referendum and what transpires in relation to the UK’s membership of the EU, the UK will provide its businesses with trading opportunities.
  • Entrepreneur Grants and Reliefs: There are numerous incentives for entrepreneurs to set up companies in the UK and provide tax efficient investment opportunities. These incentives are not EU dependent and look set to continue – and perhaps be enhanced by the current government.

Get in touch with our team to find out what structure would work best for your business.

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