Business is booming and you’re thinking of expanding into another country. Why not pick the UK?
We recently published a blog about the five top UK cities to start your business in (link to) and it’s safe to say there’s a city for any business sector, and with the UK economy predicted to grow by around 1.4% in 2018, why not head to Blighty.
London features on the list and is considered to be Europe’s wealthiest and most cosmopolitan city. English is the second most spoken language in the world with an estimated 983 million speakers worldwide, making the UK is a great country to expand into for many.
Despite the uncertainty of Brexit, EU talks are ongoing and plans are being put in place as we speak.
There are a number of considerations to think about when you expand internationally so we’ve listed our top tips to help you get started.
A tax system can appear confusing to unfamiliar eyes, but once you get to grips with the basics the world is your oyster. In the UK tax is collected by Her Majesty’s Revenue and Customs (HMRC). The UK tax year runs from the 6th of April to the 5th of April the following year. Currently we are in the 2017/2018 tax year.
· This starts at 20% and is applied to income up to £33,500 a year
· There is also a 40% rate which is applied to income from £33,501 to £150,000
· Finally, there is the final rate of 45% which is applied to income over £150,000
Value Added Tax (VAT)
· The standard rate in the UK is 20% however there is also a reduced rate of 5% and some items, such as children’s clothes are exempt from VAT
· As a business, you will need to register for VAT once your sales reach £85,000
· When you are importing outside of the EU, you must make a declatration to customs.
· You also need to pay import duty. You will also need to pay VAT on import duty (mentioned above).
· Import duty varies, depending on the classification of product, you can find out more about this here.
· The lifetime limit is £10,000,000 and the tax rate applied is 10%
Maybe we’re biased but we think there is fantastic talent in the UK! There are over 65 million people in the country and the employment rate this July was at 74.9%, the highest since records began in 1971.
The laws around pensions in the workplace have been amended over the last few years. The law is being rolled out to all workplaces which means that employees that are aged between 22 and State Pensions age, that earn at least £10,000 a year, and work in the UK, must automatically be enrolled into a pension scheme by their employer. Employers must also make contributions to employees’ pensions.
Look no further than US company Netflix. The company first expanded into Canada in 2010 and set its sights on Europe, hitting the UK and Ireland in 2012. Within nine months of launching in the UK, there were one million UK Netflix members.
With any expansion, there are risks involved so it’s important to take your time to consider them all and speak to experts in the country. Look to other companies to see how they have expanded and learn from their mistakes.
For example, the multi-billion-dollar company eBay tried to expand into China and failed miserably. It appears that the company failed to consider that the brand would not automatically translate from the US to China.