UK Ltd

Key benefits

Private Limited Companies are governed by the Companies Act 1985. A Private Limited Company is a legal entity in its own right; separate from those who run it, the Shareholders.

The limited liability, potential tax advantages and simplicity in running a private limited company make it the most common form of registered business in the UK. A Shareholders personal assets remain separate (unless they are secured against the business for borrowing) and your risk is reduced to only the money you have invested in the company and any shares you hold which you have not paid for.

There is no minimum capital requirement for a Private Limited Company. Private Limited Companies are required to have a minimum authorised share capital of £1 (or its currency equivalent) and are formed with both authorised and issued share capital. The minimum issued capital is one share but additional capital is usually issued to reflect the stability of the company. Unissued shares can be issued at any time by the Directors, subject to prior approval from the Shareholders. Shares in a Private Limited Company are transferred by private agreement between the seller and the buyer.

Key Benefits

UK Limited Companies have very few restrictions or requirements which makes them a simple yet flexible solution for many businesses.

The main requirements of a Private Limited Company are as follows:

  • A registered office is required.
  • One Director is required, the Director does not need to reside in the UK.
  • At least one Director must be an individual.
  • A Company Secretary is optional however it is advised to appoint a secretary at the registered office so all requirements can be easily fulfilled.

There are a number of advantages associated with a Private Limited Company. Some of these are as follows:

  • Limitation of Liability: This is the main advantage of a Private Limited Company. The company is a separate corporate body from the individual and liability for payment of the debt stops with the company.
  • Profit Distribution: Profits made by the company can be distributed to theShareholders in the form of dividends.
  • Ownership & Control: Private Limited Companies are flexible in their control and ownership and decisions can be made quickly and easily.
  • Separate Entity & Succession: Being a separate entity a Private Limited Company can benefit from continued existence and ownership can be easily transferred to another person.
  • Flexibility of Objectives: Because Private Limited Companies do not have to set the objectives for their business in the Memorandum of Association this leaves companies free to operate in many areas and markets.

Tax and accounting regulations

Corporation Tax (which includes Capital Gains Tax) is required to be paid by Private Limited Companies based upon their accounts which are submitted to the tax authorities and Registrar of Companies at the end of the financial year. A company is free to choose its financial year end. Companies pay approximately 21% where the net profit before tax does not exceed GBP 300,000. On profits over GBP 1.5 million the rate is 28%. The UK tax system however does offer commercial opportunities to reduce tax payable for those who engage in international business. Further details can be provided on an individual basis.

If the company requires VAT registration then a UK bank account is required. Once the bank account is opened then the VAT application can be processed. If the company is managed from within the UK then an online application can be made, if the company is managed from outside the UK then the application will be done manually. The process takes between 4-8 weeks depending on the method of application.

A Private Limited Company is required to file accounts with the Registrar of Companies and HM Revenue & Customs. However due to the regulations in place over 90% of Private Limited Companies can file abbreviated accounts rather than full accounts due to their size and turnover. The type of filing accounts is dependent on the size of the company and is outlined below.

Small Company Filing Requirements:

The description of a small company is one whose turnover does not exceed GBP5.6 million, the balance sheet total must not be more than GBP3.26 million, the average number of employees must not be more than 50. Small Companies must deliver the following filings to Companies House:

  • Abbreviated balance sheet and notes
  • Special auditor’s report (if required)
  • Small companies are not required to file profit and loss, employees and turnover

Medium Company Filing Requirements:

The description of a medium company is one that meets at least two of the following criteria; annual turnover does not exceed GBP25.9 million, the balance sheet total does not exceed GBP12.9 million and the average number of employees is not more than 250. Medium Companies must deliver the following filings to Companies House:

  • Full balance sheet
  • Abbreviated profit and loss account (no turnover disclosed)
  • Special auditors’ report
  • Directors report
  • Notes to the Accounts
  • Medium Companies are not required to file turnover

Full Company Filing Requirements:

A Private Limited Company must file full accounts when the annual turnover exceeds GBP25.9 million, the balance sheet total exceeds GBP12.9 million and the average number of employees is more than 250. These companies must deliver the following filings to Companies House:

  • A profit and loss account
  • A balance sheet signed by the director
  • An auditors’ report signed by an auditor
  • A directors report signed by a director or secretary of the company
  • Notes to Accounts
  • Group Accounts (if required)

Procedure of company registration

Private Limited Companies are governed by the ‘Companies Act 1985’. A Private Limited Company is a legal entity in its own right; separate from those who run it, the shareholders. The limited liability, potential tax advantages and simplicity in running a private limited company make it the most common form of registered business in the UK. As a shareholder, your personal assets remain separate (unless they are secured against the business for borrowing) and your risk is reduced to only the money you have invested in the company and any shares you hold which you have not paid for.

There is no minimum capital requirement for a Private Limited Company. Private Limited Companies are required to have a minimum authorized share capital of GBP1 (or its currency equivalent) and are formed with both authorized and issued share capital. The minimum issued capital is one share but additional capital is usually issued to reflect the stability of the company. Unissued shares can be issued at any time by the directors, subject to prior approval from the shareholders. Shares in a Private Limited Company are transferred by private agreement between the seller and the buyer.

Documents required for company formation:

In order to register a Private Limited Company the company name must be officially approved by the Registrar of Companies. Once approved the following documents are required:

  • Certified proof of ID for directors / shareholders and beneficial owner
  • Certified proof of address for directors / shareholders and beneficial owner
  • Completed Application Form (supplied by Eltoma)

Timescale:

The formation of a Private Limited Company is a very quick process and we can even offer next day incorporation (once all documents are received and approved)

The following documents will be received upon incorporation:

  • A Certificate of Registration
  • Memorandum and Articles of Association
  • Minutes of the First Meeting of Directors
  • Share Certificates and Company Register