The UK is Europe’s top inward investment location, attracting over 36% of all US investment. There are many reasons for our popularity with US investors of all sizes – and we certainly have a great deal to offer.

The UK greatly values the contribution to the economy that overseas-owned companies make. We understand the strategic drivers that affect international businesses and can offer the on-going support that will help investor companies thrive once they have located.

UK support network
UK Trade & Investment is the lead government organisation created to support overseas businesses seeking to set up or expand in the UK. It works in close partnership with the English regional development agencies and the national development agencies in Scotland, Wales and Northern Ireland.

This partnership delivers a countrywide network of support to help US companies maximise their investment in the UK and to achieve – and exceed – their business objectives.

What can UK Trade & Investment offer?
UK Trade & Investment will help you make sound investment decisions, based on our commercial expertise and unrivalled local access and knowledge:

• Introductions to your sector networks – industry leaders, universities, other centres of excellence and collaborative partnerships
• Bespoke information on key commercial considerations – company formation, financial incentives, labour, real estate, transport, utilities and regulatory issues
• Thorough regional analysis and informed advice to help you choose the right location
• Pipeline into central government to help safeguard your business interests

For further information on relocating to the UK, visit the UK Trade & Investment website at www.uktradeinvest.gov.uk

Entry requirements
An appropriate entry clearance, obtained before arrival, must be held by all non-European Economic Area (EEA) nationals entering the UK if they are:

• Representatives of overseas companies that that have no branch, subsidiary or other representative in the UK
• Persons coming to establish themselves in business or self-employment

Applying for entry clearance
An application for entry clearance must be made to a British Embassy, High Commission or Consulate General abroad.

Visas
UKvisas is a one-stop-shop service that handles entry clearance for foreign nationals wishing to enter the UK. Run jointly by the Foreign Office and the Home Office, it operates through British Embassies and High Commissions overseas.

Do you need a visa?
Whether you will need a visa to enter the UK depends on your country of origin and your personal details. Broadly speaking, if you are coming to the UK as an investor you will probably need a visa if you are not an EEA national. However, you may also be exempt if you can claim British Citizenship or another connection with the UK – for instance, if you are a Commonwealth citizen and you can prove that one of your grandparents was born in the UK. You can find all the information you need at your nearest UK overseas mission. Contact details for all UK overseas missions are available from the shortcut menu at: www.fco.gov.uk

You can carry out a basic preliminary check on your visa requirements by filling out the online visa enquiry form at www.ukvisas.gov.uk

Work permits
Any non-EEA national subject to immigration control who wishes to come to the UK must, with limited exceptions, have a work permit.

Since October 2000, the entry clearance officer issuing the visa abroad will also grant leave to enter. When the visitor arrives at the port of entry, an immigration officer will simply check that the visa is valid and that the passport containing it is genuine.

You can obtain application forms from your nearest UK overseas mission or print them from the UKvisas website. If you are coming to the UK as an inward investor, you will probably not need a work permit so long as you have obtained any necessary entry clearance at a UK overseas mission.

This applies if you are coming here to:

• Set up a new business
• Take over an existing business
• Join an existing business as a partner, director or sole trader
• Establish a UK branch or subsidiary of an overseas firm

Required information

Trafalgar Square

• Intra Company Transfers (ICT) – for employees of multinational companies who are transferring to a skilled post in the UK
• Board level posts
• Inward investment – for new posts that are essential to an inward investment project worth at least £250,000
• Shortage occupations – for posts where suitably qualified people are in very short supply

Exemptions
The following do not need work permits to work in the UK:

• Nationals of European Economic Area (EEA) countries
• People born in Gibraltar
• Commonwealth citizens who were allowed to enter or remain in the UK on the basis that a grandparent was born here
• Husbands, wives and dependent children under 18 of people who hold work permits or who are exempt for any of the above reasons, providing the endorsement in their passport places no restriction on their employment here
• People with no conditions attached to their stay in the UK

Highly Skilled Migrant Programme
Launched in early 2002, the Highly Skilled Migrant Programme (HSMP) is designed to allow individuals with exceptional personal skills and experience to come to the UK to seek and take work.

UK Residence Permits
In November 2003, the Immigration and Nationality Department of the Home Office (IND) introduced the UK Residence Permit. From that date, anyone in the UK applying for “Leave to Remain” will be issued the UK Residence Permit.

In parallel, the UK has also introduced a mandatory entry clearance requirement to all third country nationals (other than EEA family members) who intend to stay in the UK for longer than six months.

Useful contacts
For application forms and guidance notes for work permits for England, Scotland and Wales, call: +44 (0) 8705 210224 or download them at: www.workpermits.gov.uk

For immigration matters relating to England, Scotland, Wales or Northern Ireland, contact:
Immigration and Nationality Directorate
Lunar House
40 Wellesley Road
Croydon CR9 2BY
Tel: +44 (0) 870 606 7766

If you are overseas, you can get advice from a UK government representative, for example at a British Embassy, Consulate or High Commission.

Forming a company
It is simple to form a company in the UK and UK company law does not discriminate against foreign nationals. When an investor or company from abroad decides to set up a business in the UK, several kinds of company arrangement are possible:

• Private company limited by shares (Ltd) – members’ liability is limited to the amount unpaid on shares they hold
• Private company limited by guarantee – members’ liability is limited to the amount they have agreed to contribute to the company’s assets if it is wound up
• Private unlimited company – there is no limit to the members’ liability
• Public limited company (plc) – the company’s shares are offered for sale to the general public and members’ liability is limited to the amount unpaid on shares held by them. Only a plc may offer its shares for public subscription
  

British landmarks (left to right): Harbourside, Bristol; Tate Gallery, Cornwall; Leeds Castle,Kent

For almost all business purposes, the form used is the company limited by shares, either as a private limited company (Ltd) or as a public limited company (plc).
Most foreign companies set up a private limited company. No consents are needed, no local shareholders or directors are required and no minimum capital rules apply. Certain documents (for example, Memorandum and Articles) must be filed with Companies House in order to form the company. Specialist advice should be sought if forming joint ventures, branches or partnerships.

Companies House provides comprehensive guidance, a series of detailed booklets on various aspects of company formation, and numerous useful addresses on its website www.companieshouse.gov.uk

Company taxation
Every “UK resident” company pays corporation tax on its worldwide profits (adjusted for tax purposes), including capital gains on the disposal of assets.
A company is “UK resident” if it is incorporated in the UK or if its central management and control are in the UK. If the company pays tax abroad on any foreign income, it will still be liable to pay tax in the UK on the same income. However, the foreign tax paid can generally be credited against the company’s UK tax bill, so reducing the amount that has to be paid in the UK. For a single company, the rates of Corporation Tax for 2003/4 are as follows:

• For companies with profits up to £10,000, the tax rate is zero
• For companies with profits of £10,001 to £50,000, marginal relief eases the transaction from the starting rate of zero to the small companies’ rate of 19%
• For companies with profits of £50,001 to £300,000 the tax rate is 19%
• For companies with profits of £300,001 to £1.5m, marginal relief eases the transaction from the small rate of 19% to the main rate of 30%
• The main rate of 30% is paid by companies with profits of more than £1.5m

A foreign company with a branch in the UK pays corporation tax on the trading profits of the branch’s activities in the UK. UK capital gains and investment income connected with the branch’s operations are also taxed.
Branch profits are generally taxed at 30%, but may be reduced for a company that is either part of a group or has associated companies.

All UK residents are entitled to the “basic personal allowance”.
This is an amount of income on which you do not have to pay any tax. For 2003/4, it is £4,615. Other relief and allowances may be available, depending on individual circumstances.
For income above the level of the personal allowance, the tax rates for 2003/4 tax year are as follows:

• 10% on the first £1,960 of taxable income (known as the starting rate)
• 22% on taxable income between £1,960 and £30,500 (the basic rate)
• 40% on taxable income over £30,500 (the higher rate)

Individuals are exempt from Capital Gains Tax (CGT) on the first £7,900 for the tax year 2003/4 of profits made (in any one year) from the sale of an asset. Any amount above that will be taxed at:

• 10% on gains up to £1,960
• 20% on gains between £1,961 and £30,500
• 40% on gains over £30,500

For more information and guidance on all aspects of company taxation, including a range of helpful booklets, visit Inland Revenue at www.inlandrevenue.gov.uk

Grants and assistance
The UK government can offer Regional Selective Assistance (RSA) for growth and jobs, to overseas owned as well as domestic companies opening a new plant, or expanding or modernising an existing plant in the Assisted Areas of Great Britain and Northern Ireland. Just fewer than 30% of the UK population live in the Assisted Areas. Most manufacturing and some service sectors are eligible. It is the government’s main form of direct financial assistance to companies.

The aims of the scheme are to:

• Help to attract and retain inward investment that would not otherwise come to the UK
• Increase prosperity for all by improving the productivity and competitiveness of national and relevant regional economies
• Create and/or safeguard jobs, preferably skilled jobs, in the Assisted Areas

However, the majority of the finance for projects will be expected to come from private-sector sources. There is also a wide and varied range of UK initiatives that offer assistance to companies within the area of research and development (R&D), for example, the R&D tax credit for SMEs. This was introduced to assist SMEs to undertake R&D, either for the first time or to encourage them to increase their R&D effort.

Spending on qualifying R&D attracts relief for 150% of the expenditure. This will reduce the cash cost by 28.5% for a company benefiting from the small company rate of corporation tax (19%). Companies not yet making a profit can take the relief up front and reduce their cash cost by 24%.

Large companies are entitled to an additional deduction from their taxable income of 25% of their current spending on qualifying R&D, in addition to the normal 100% deduction.

For example, if a company spends £100,000 on qualifying R&D it will be able to deduct £100,000 from its taxable income under ordinary tax rules and an additional £25,000 under the R&D tax credit. For a company paying the main rate of corporation tax at 30%, the credit would therefore give a reduction in tax of £7,500. Another scheme is EUREKA, which exists to create trans-border, market-orientated, high-tech European R&D projects.

A project meets the EUREKA criteria if it:

• Is a high-tech, market-orientated R&D project
• Involves partners from at least two EUREKA members
• Aims to develop a cutting–edge, civilian product, process or service
• Is funded by the partners themselves, who may receive public financing from their national governments

EUREKA supports the competitiveness of European companies through international collaboration, by creating links and networks of innovation. It offers flexible and dynamic support, quality label and expertise for marketoriented R&D projects.

It is a framework through which industry and research institutes from 34 countries develop and exploit the advanced technologies crucial to global competitiveness and a better quality of life.

Although project participants are expected to arrange the necessary finance themselves, the Department of Trade and Industry (DTI) may be able to assist with costs. With priority given to small companies, up to 50% of eligible costs may be met by the DTI. Around 1,000 projects have been successfully completed under the EUREKA programme.

National Project Co-ordinators (NPC) is the participants’ national contact to EUREKA. The NPC provides all necessary information and assists companies or research centres interested in proposing and launching a EUREKA project. NPC will assist in finding international partners for project proposals and in obtaining the EUREKA label.
For more information, visit: www.eureka.be/ifs/files/ifs/jsp-bin/eureka/ifs/jsps/publicHome.jsp


Assistance for small businesses: Grant for Research and Development
Grant for Research and Development is the DTI initiative that provides grants to help individuals and small- and medium-sized businesses to research and develop technologically-innovative products and processes. This is a new DTI product, which replaces the Smart scheme and is available in England. Scotland, Wales and Northern Ireland have their own initiatives.

Further information on these can be obtained from the following websites:
Scotland: www.scotland.gov.uk
Wales: www.wales.gov.uk
Northern Ireland: www.investni.com/invest/

The Grant for Research and Development provides for the following:

• Micro Projects
  Simple, low-cost development projects lasting no longer than 12 months. The output should be a simple prototype of a novel or innovative product or process. A grant of up to £20,000 is available to businesses with fewer than 10 employees
• Research Projects
  Typically involve planned research or critical investigation lasting between six and 18 months. The result of the project could be new scientific or technical knowledge that may be useful in developing a new product or process. A grant of up to £75,000 is available to businesses with fewer than 50 employees
• Development Projects
  Involve the shaping of industrial research into a pre-production prototype of a technologically innovative product or industrial process. A grant of up to £200,000 is available for businesses with fewer than 250 employees
• Exceptional Projects
  Involve technology developments that have higher costs. These projects are likely to generate much wider economic benefits and must be recognised as of “strategic” importance for a technology or industrial sector. A grant of up to £500,000 is available to businesses with fewer than 250 employees with a qualifying project.

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