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Executive Summary
United Kingdom of Great Britain and Northern Ireland is widely known as UK or Great Britain, which is a constitutional monarchy, and a country leader is a head of other 15 states of the Commonwealth country. Isle of Man, Guernsey and Jersey are the Crown Dependencies, at the same time having a large autonomy and not making part of the EU.

London is the capital of the UK. The country has an old tradition of Christianity and the link between the State and the Church is maintained even today.

The UK population counts over 60,000,000 inhabitants, which is the third largest number in the EU after Germany and France. The rising birth rate is still not able to be superior to a high replacement rate. There is a high immigration to the UK, which increased especially with enlarging the European Union (immigration from post Soviet and post Communist countries).

Even though the United Kingdom does not have an official de jure language, English is commonly accepted to be such. Ancient languages as Gaelic and Cornish are preserved and widely used by a significant part of native inhabitants.

UK is the country where Industrial Revolution has started that has had a great impact on a country’s further development. Automotive industry, financial services, textile and tourism are highly developed, while agriculture makes less than 1% of the GDP. UK has a small coal reserve, but it mainly concentrates on natural gas and oil (however, these resources are continuously declining).
The currency is Pound Sterling (£) controlled by the Bank of England. The country refused to join the Euro zone. The GDP per capita in 2007 was of US$ 36,570.

Geography
UK is situated in the North-Eastern part of Europe; it is connected to France by the Channel Tunnel, and is surrounded by the Atlantic Ocean, Irish Sea, Northern Sea and English Channel. Northern Ireland is the only part that has a land border with the Republic of Ireland. The country covers almost 245,000 sq km surface, including its smaller islands. There is a temperate climate in the UK, with temperatures ranging from -10 C in winter and almost never above +35 C in summer. Gulf Stream brings particularly mild but wet winters to the Western cost.
UK comprises England, Scotland, Wales and Northern Ireland, and the natural relief is rich with lowland and mountainous terrains. Open fields represent a typical landscape of the country.

Map, Flag and Coat of Arm

 


Types of Company

Corporation

This structure refers to a body corporate created by the Royal Charter or with a statute, but it is not a widely used type of company nowadays. In the private sector these entities are named as companies and are regulated by the Companies Act of 2006. The most common type of a UK company is a limited company: Limited, LTD (please see below), which can be limited by guarantee or by shares. Other types of corporations include public limited company or unlimited company (please see below).

LLP
Limited Liability Partnerships is a corporate body in the UK, so independently of its members, the structure ensures continuity, which is a significant difference from a partnership. Members of the LLP have a collective responsibility, and as in corporation and a limited company they cannot lose more than they invest into the structure.

It is an attractive structure from the taxation point of view as it does not pay a UK tax, but so do the members on the profits they gain with the help of the LLP. This is a very flexible business organization opportunity, there is even no particular requirement to constitute an LLP agreement in writing.

LTD
It is the corporation the liability of which is limited by the law. There are three categories under this typology – a) private company limited by guarantee (does not have share capital, but its members guarantee the capital which is to be paid by them in case a company is wound up), b) private company limited by shares (the most common form of a limited company, in which each shareholder is liable to the amount subscribed) and c) public limited company (please see below).

Partnership
General partners are those liable for the whole amount of debts in case of a company’s dissolution. Limited partner, in such a case, contributes only up to the amount agreed. Limited partners cannot receive back their initial capital invested in the partnership during its existence period and cannot actively participate in the business management. In case they do so, they become liable to all the debts if a partnership is wound up. An individual and a company can be whether a limited or a general partner of a partnership. A limited partnership is registered following the regulations of the Limited Partnership Act of the year 1907. In general, a limited partnership counts no more than 20 partners.

Public Limited Company (PLC)
This is a company that offers its shares to the wide public, it was introduced by the Companies Act in 1980. As a necessary requirement a company name must include the words “public limited company” or “PLC” at the end, and it should be registered within several regulatory institutions. It is publicly traded on a stock exchange.

Unlimited Company
This company is incorporated by registration and regulated by the Companies Act of 1985, where the responsibility of members is unlimited and they are liable to all the debts in case a company has to live a compulsory liquidation. This structure is similar to a partnership, but is chosen more rarely than the last one. Unlimited company has a separate legal personality, which is different from the partnership.

Venture Capital Trust
This structure was introduced in 1995 in order to favor investment into and development of small and medium companies. It is a similar structure to an investment trust, which has its investment program and an investment manager. Shares issue costs are usually around 5%, management costs are around 3.5% and some incentive fees can be applicable as well. The investments are made into the unquoted small and medium size companies. 20% of taxes are deducted of an investment up to a maximum investment per year of £100,000.

Taxation
The income tax year in the UK starts on 6th April and ends on 5th April of the next year.

Private
An individual is liable to pay personal income tax in case he/she is a UK resident (citizenship is not the determinant factor), i.e. if a person passes more than 182 days in a tax year in UK, or if visits the country for at least 91 days for 4 consecutive years, or if the visits are regular and exclude occasional regularity.

Non-residents are liable to income tax only for the profit gained on business affairs within the UK and property situated on the UK territory. However, non-residents are not liable to pay taxes on UK bank deposits.

Capital gain tax is not payable only after 5 years of non-residence in the UK.

The UK has lower taxes in comparison to many other European countries and it offers tax facilitations to entities who are resident, but not domiciled in the UK. Profits derived from foreign investments are exempt from the tax for such individuals as long as they are not remitted to the UK. This is an attractive opportunity for many famous people as well.

Corporate
A company is considered to be a UK resident if it is incorporated in the UK or its central management is conducted from there. Double taxation can be avoided if a relative Double Tax Treaty can be applied in a particular case.

Having signed more than 115 Double Tax Treaties, more than any other European country, UK represents a good opportunity to a multinational company that seeks to be registered or to have a branch in a well reputable jurisdiction, to receive dividend income with the lowest possible amount of foreign tax deduction.

Tax favored status have the following investments: UK government bonds,  individual saving accounts, national savings and investments, pension funds, venture capital trusts, insurance bonds and enterprise investments schemes.

VAT represents the third largest governmental income from taxes and its standard rate is of 17.5%.
Particular attention for the tax optimization purposes should be paid to the LLP structure (please see above).

 
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