The UK is one of the best places in the world to start a business. It has been ranked among the 10 best countries in the world for innovation, digital skills and tech start-ups for the past three years. There are numerous benefits to starting a business in the UK despite challenges due to Brexit. Whether you’re from the UK or not, it’s an exciting time to launch a business here. Let’s take a look at 5 reasons why you should start up your business in the UK!
Reason #1 The UK Culture is Favourable to Entrepreneurs
The UK has always been a welcoming place to start a business. The UK was the first country to have an industrial revolution, followed by an age of entrepreneurship and innovation. Starting a business in the UK is relatively straightforward. You don’t need to be an expert on the best way to launch a business in the UK, but if you follow a few simple steps, you will be well on your way to success. Be assured that the UK government is still keen to attract entrepreneurs to the UK, and has created a favourable environment for foreign entrepreneurs to settle in.
Reason #2 Access to cheaper Talents & Skills in a flexible labour market
As well as being a welcoming place for entrepreneurs, the UK is also a great place to find the skills and talents you’ll need to build a successful business. If you’re looking for software developers, data scientists or engineers, the UK is one of the best places to find them.
Leading universities such as Oxford University are one of the top centres in the world for research and development in artificial intelligence. With 86.7% of graduates employed after their studies in 2021, the UK has one of the highest graduate employment rates in Europe. Access to talent is perhaps one of the biggest advantages of starting a business in the UK. The availability of skilled workers makes it easier for start-ups to scale up and become profitable.
Not only does the UK have a great pool of tech talents, but the cost of hiring them is also one of the lowest in Europe. It is worth noting that UK employment law is particularly favourable to employers. In fact, employers can dismiss employees with less than two years’ service without reason.
Reason #3 Brexit Means More Investment in Tech
While Brexit brings some challenges to businesses, it also means that investors have more money to put into start-ups. UK companies received $9 billion in venture capital during the first quarter of 2022 according to KPMG’s latest Venture Pulse report. In fact, the UK has become one of the top three destinations for VC investment in Europe.
In 2014, the British Government established the British Business Bank, which is a government-owned bank that provides finance to small and medium-sized businesses (SMEs) in the UK. It was founded to increase the flow of finance to SMEs, and since then has provided over £14 billion of financing through various programmes in 2021. The main programmes that the British Business Bank offers are loans, equity investment, and guarantee schemes. The loans programme provides funding to SMEs through a number of accredited lenders, while the equity investment programme invests in high-growth companies through multiple venture capital firms. The guarantee scheme helps SMEs access financing by providing a government guarantee on certain types of loans. Check out which programmes are available for your business on their website: https://www.british-business-bank.co.uk/finance-options/
Reason #4 Tax Benefits for Start-ups and SMEs
Staging a business in the UK provides significant tax advantages for start-ups. There is the option you to set up your business as a limited company. This means the profits from your business are taxed as a company. Companies are taxed at a lower rate than if you were taxed as an individual. For example, if you were taxed, as an individual you’d pay a marginal tax rate of 37% and as a limited company you’d pay a corporation tax of 19% on your profits.
There are other tax incentives available for SMEs such as the Research & Development Tax Credit. The R&D Tax Credit is a UK government scheme that offers tax relief for companies that are engaged in research and development activities. The credit is worth up to 230% of eligible R&D expenditure, making it a highly attractive proposition for SMEs looking to invest in innovation. The credit has been designed to encourage more businesses to undertake R&D activities, which can lead to the development of new products and processes and bring economic benefits to the UK. To be eligible for the credit, businesses must meet certain criteria regarding their size and level of R&D activity. More information is available on the government’s website: https://www.gov.uk/guidance/corporation-tax-research-and-development-rd-relief.
If you are looking to employ staff in the UK, you’ll be pleased to know that the employment taxes are lower than in many other countries. In fact, according to the OECD, the UK has one of the lowest employment tax rates among European countries. While the marginal employer social security contribution rate was at 13.80% in 2021 in the UK, the rate reached 19.98% in Germany, 29.9% in Spain, 31.42% in Sweden, 31.58% in Italy and even 35.86% in France the same year.
This low rate of employment tax means that it’s more affordable for businesses to create jobs in the UK. It also makes the UK a more attractive destination for foreign businesses looking to set up operations here.
The low employment tax rates are strengthened by the Employment Allowance. This allowance allows employers to offset up to £5,000 against their liability for Employer’s National Insurance contributions.
For more information about the cost of employment in the UK, read our post entitled How much does it cost to hire a new employee in the UK?
Reason #5 The UK is a Great Place to Find Customers
As the second-largest market in Europe, the UK provides businesses with a wealth of opportunities. With 67 million consumers and a GDP of over $2.5 trillion, the UK is an attractive destination for businesses looking to expand their operations.
The average household spending of GBP 585.60 per week is spent at 10.6% on Food & non-alcoholic beverage, 8.8% on restaurants and hotels, 7.8% on miscellaneous goods and services, 4.2% on clothing and footwear and 3.6% on communication tools.
With a total of USD $180.39 billion in retail e-commerce sales in 2020, the UK came in third behind China (USD $2,296.95 billion) and the United States (USD $794.50 billion). If you want to sell products and services online, the UK is a great place to set up your business.
Finally, there’s no doubt that the UK is a trendsetting nation. From fashion and music to food and drink, there are plenty of trends that have started in the UK and gone on to become hugely popular across Europe.
So, if you’re an entrepreneur with a great business idea, the UK is definitely worth considering as your next location. With favourable conditions for entrepreneurs and a thriving tech sector, the UK offers plenty of opportunities for businesses to grow and succeed. And don’t forget — the British customer base is one of the largest in Europe, so there are plenty of potential customers to be found here. If you’re looking for a place to start your next business venture, the UK should definitely be at the top of your list.
Do you want to explore the opportunities the UK has to offer to your business? At operviser, we can help you explore the potential of your business idea in the UK. Get in touch with our team at firstname.lastname@example.org or visit our website at www.operviser.com for more information.