UK

Technology Investment is Booming in the UK – Why Should You Be Speaking to Dixcart?

The UK continues to be a favoured place for technology start-up companies, with 2019 investment growth, outpacing that of both China and the US.

According to the Government backed ‘Tech Nation Dealroom’, British technology start-ups raised $13.2 billion in 2019, an increase of 44% compared to 2018.

Eric Schmidt, who was the Chief Executive Chairman of Google for six years to 2017, stated; “Britain is a particularly good platform to do global things. There’s enough ‘Unicorns’ (that is start-ups worth $1billion) here that the system will generate enough learning to continue to generate more capital. Markets are accessible. You have a real asset here. Don’t screw it up.” 

Sarl Blevin, co-founder of Lovefilms said; “The secular wave of technology is so huge, its beyond Brexit. If you look at the numbers since the country voted ‘leave’ in 2016, every year there has been a record: more money has gone into the sector, more jobs have been created.” 

Dixcart Comment

When individuals or companies invest in the UK, whether in tech companies or otherwise, amongst the factors that they take into account, will undoubtedly be the tax implications.

The UK is extremely competitive, with key factors including:

  • Its low rate of corporation tax: currently 19%.
  • Significant tax credits for research and development.
  • No withholding tax on dividends.
  • No capital gains tax on gains made by non-UK residents on the disposal of shares held in UK companies (other than real estate companies).
  • Income tax and capital gains tax reliefs for UK resident ‘seed’ investors.

Other reasons why the UK is an attractive jurisdiction:

  • A stable legal and regulatory environment.
  • Transparent, flexible corporate law and governance that makes it easy to do business.
  • The top-rated major European economy for attracting talent with one of the largest labour forces in Europe, and lower labour costs than Italy, France or Germany.
  • An encouragement of innovation as well as opportunities for entrepreneurs and employees to move to the UK, please see: IN629: UK Immigration – A Summary of Key Changes 2019.
  • A large network of experienced professional advisers.

Further Information

Any one of our professionals at the Dixcart office in the UK, would be delighted to explain more – as to why the UK is an attractive location for companies, the tax benefits, and the opportunities available to innovators in terms of re-locating to the UK.

Please contact: advice.uk@dixcart.com.

Why Use a Corporate Family Investment Structure and Why Use a Guernsey Corporation?

Family investment companies are becoming increasingly popular as an alternative to trusts for wealth, estate and succession planning.

Why has the use of Family Investment Companies Grown? 

Their use has grown significantly in recent years, particularly in instances where it is difficult for individuals to pass value into a trust, without being liable to immediate tax charges, but there is a desire to continue to have some control and/or influence over the family’s wealth protection.

Benefits of a Family Investment Company include:

  1. Assuming that an individual has available cash to transfer into a company, the transfer into the company is tax-free.
  2. For UK deemed domiciled individuals there would be no immediate charge to UK Inheritance Tax (IHT), on a gift of shares from the donor to another individual, as this is deemed to be a potentially exempt transfer (PET). There will be no further IHT implications on the donor if they survive for seven years following the date of the gift.
  3. The donor can still retain some element of control in the company, providing the Articles of Association are carefully drafted.
  4. There is no ten year anniversary or IHT exit charge.
  5. Family Investment Companies are income tax efficient for dividend income as most dividends will be received tax free into the company.
  6. Shareholders only pay tax to the extent that the company distributes income. If the profits are retained within the company no tax would therefore be payable by the shareholders.
  7. International families making direct investments into UK investment companies as individuals, are liable to UK IHT on those UK situs assets and it is also advisable that they have a UK will to deal with those assets on their death. Making those investments through a Family Investment Company removes the liability to UK IHT and removes the need to have a UK will. This is as long as the Family Investment Company is offshore and the individuals are non-UK resident, or non UK resident non-dom (or non-deemed dom), to receive the IHT benefit.
  8. Memorandum and Articles of Association can be bespoke to the family requirements. There can, for example, be different classes of shares with varying rights for different family members, to suit their circumstances and to meet the wealth and succession planning objectives of the founders.

 Why Use a Guernsey Company?

There are a number of reasons why it is efficient to use a Guernsey Company in a Family Investment Company structure: 

  • The company will pay tax at a rate of 0% on any local profit that it generates (the Guernsey Corporate Tax Rate).
  • Provided that the company is incorporated in Guernsey and the register of members is kept, as required, in Guernsey, it is possible to retain ‘excluded property’ status in relation to UK IHT (with the exception of UK residential property).
  • The shares in the company are not a UK situs asset. If the company is a private Guernsey company it does not need to file accounts. Whilst there is a beneficial ownership register for companies in Guernsey, this is private and not searchable by the public. In contrast a UK company would need to file accounts on public record, and directors and shareholders would be listed on the Companies House website, a free and searchable website. The shareholders would, in addition, be deemed to have a UK situs asset, regardless of where in the world they live.
  • The compliance and regulatory requirements for non-UK companies are often considered greater than for UK companies. However these requirements are easily and efficiently navigated with the right professional firm, and with appropriate planning. 

Further Reasons Why Family Investment Companies are Increasing in Popularity

Family investment companies are also becoming very popular in the UK, particularly amongst UK residents and domiciled individuals. This is largely due to the ability to roll up income and gains, having paid only corporation tax. In addition, if all income is in the form of dividends, there should be no liability to tax. 

Regardless of whether there is a UK tax position to consider, a Family Investment Company may be more familiar and better understood than a trust, for many families’ wealth planning and asset protection.

Additional Information

The Dixcart Group has fifty years of experience advising clients on wealth management strategies to best meet specific circumstances and we understand the often complex issues involved.

The Dixcart office in Guernsey provides advice to several private clients and has extensive expertise in establishing and managing Guernsey corporate structures.

For additional information regarding Guernsey Family Investment Companies, please speak to Bruce Watterson, John Nelson or Steve de Jersey at the Dixcart office in Guernsey: advice.guernsey@dixcart.com, or to your regular Dixcart contact.

Dixcart new office in Cyprus

Robert Homem, the Managing Director of Dixcart Cyprus, is delighted to announce that the Dixcart office in Cyprus moved to its new premises in Limassol, during the first week of December 2019.

 Substantial red-tape and two sets of Planning Permissions had to be navigated, as well as a number of complications in relation to the electricity supply. A few grey hairs were gained.

 The Dixcart floor is fully operational while the outside areas are still under completion and are expected to be finalised by the end of February. The building comprises three floors (approximately 600sqm). One floor is being used by Dixcart and the other two for serviced offices. We will therefore be launching a Cyprus Dixcart Business Centre, to add to the other five Dixcart Business Centres.

 The building has a little bit of history to it, being built in 1958 by a Cypriot  Lawyer who practised in the UK. At the time of building, most of the materials were brought from the UK including fireplaces and wooden floors. Unfortunately it was not possible to maintain the original wooden floors as a result of damage over the years.

In the late 50’s to early 70’s, Limassol was not a main town in Cyprus and the street in which the building is located was most likely one of the main roads leading to the port. It was only after the Turkish invasion in 1974 that Limassol began to grow as a city.

Every effort has been made to preserve the original architecture of the building. The only major amendment, apart from the outside, was the construction of a new staircase to enable better access to the three floors. A full, but sympathetic renovation was required internally, to modernise the facilities and infrastructure.

With this investment, Dixcart is able to continue its growth and provide clients with a comprehensive range of business support services. The Cyprus Dixcart Business Centre offers 2-8 desk rooms and a full range of ancillary services are available to assist with the business needs of clients.

We look forward to you visiting us at our new premises – just let us know when you might be in Cyprus: advice.cyprus@dixcart.com

UK

Relocating a Company to the UK? Why Consider the Dixcart Business Centre

There may be several reasons why individuals wishing to establish a company in the UK might consider the use of a Business Centre, providing not only serviced office capacity, but also substance. Business Centres can offer a productive work environment and a cost-effective option for organisations with international interests wishing to operate from a particular location.

A company establishing itself in the UK will require premises for staff, and for any company set up in the UK, management and control of the business must take place there.

Substance and Value Creation

Substance is an important factor for organisations to consider, especially international companies wanting to establish subsidiaries in other countries. In addition, measures are being implemented around the world, to ensure that corporate tax is levied where the real value creation of a business takes place.

Companies must show that the management, control and day to day decisions concerning their activities are taken in each specific foreign jurisdiction where they have a branch or subsidiary, and that the company itself operates through an establishment that provides a real presence in that location.

Tax Advantages Available to UK Companies

  • The UK has one of the lowest rates of corporation tax in the western world. The current UK corporation tax rate is 19%.
  • There is no withholding tax on dividends.
  • Most share disposals and dividends received by holding companies are exempt from taxation.
  • Controlled foreign company tax rates only apply to a narrow classification of profit.

For more information on the advantages available to companies and foreign individuals relocating to the UK, please contact: advice.uk@dixcart.com.

Why Consider Dixcart Serviced Offices in the UK?

The Dixcart Serviced offices in the UK provide high quality, flexible furnished accommodation, and sophisticated IT and communication systems.

The offices, which can accommodate 2-6 people, are all on ground floor level and offer a quiet and modern working environment with plenty of natural light. Each room is fully furnished, with telephone handsets and controlled air conditioning. There is a shared reception area and kitchen facilities specifically for serviced office clients. Meeting and boardroom facilities are available in the building and there is some on-site parking.

         

Serviced office for 4 people                                                         Serviced office for 6 people

Meeting room available for hire

Location of the UK Business Centre: Dixcart House

The Dixcart Business Centre in the UK is located at Dixcart House on Bourne Business Park, Surrey. Dixcart House is 31km from central London and just minutes from the M25/M3/M4/M40. Train services from Weybridge serve central London and you can be in the heart of the capital in 30 minutes. With only a 20-minute drive to Heathrow Airport and 45 minutes to Gatwick Airport, Dixcart House is ideally placed for individuals needing to travel internationally.

Located close to extensive amenities and established Green Belt, the Business Park offers an environment of the highest quality. Situated between Weybridge and Addlestone, the Business Park benefits from close access to a wide range of restaurants, cafes and shops, together with extensive hotel and leisure facilities.

Additional Services at Dixcart House

We have 6 meeting rooms and a large boardroom, which can accommodate up to 25 people comfortably. The space can be divided into smaller meeting rooms or a theatre style seminar space, if required.

Dixcart House offers a flexible and safe office environment with 24-hour access to the serviced office for tenants. The reception area is staffed during normal business hours and the receptionists greet visitors, co-ordinate meeting room bookings and provide secretarial services, if required.

How Can Dixcart Help?

Many businesses starting operations in a new location will require additional professional support for their growing business. Professional accounting, tax and legal staff are in the same building and can offer expert advice in the following areas:

  • Accounting
  • Corporate and Employment Law
  • Human Resources
  • IT Support
  • Payroll
  • Tax Support and Advice

Dixcart also has established relationships with key contacts working in many other businesses in the UK and can assist with introductions to other professionals.

Summary and Substance

Increasingly, substance is a critical matter for a business, the Dixcart Business Centre at Dixcart House provides the following:

  • A physical presence.
  • Management, control and decision-making processes that can be demonstrated to be made in the UK.
  • A company that has local employees and pays local income tax and social security contributions for them.

In addition to the Business Centre in the UK, further Dixcart Business Centres are located in Guernsey, the Isle of Man, Madeira (Portugal) and Malta.

Further Information

For further information regarding the Dixcart Business Centre in the UK please visit our website, or contact Fiona Douglas or Julia Wigram: advice.uk@dixcart.com or your usual Dixcart contact.

UK

Formation of Companies in the UK

Why use a UK Company?

The UK Government has introduced many changes to make the UK tax system more competitive. This has led to the return of UK holding companies, the re-shoring of manufacturing and increased UK based research and development (R&D).

United Kingdom (UK) entities have a respectable international image and can be used tax efficiently for cross border trading and as international holding companies.

Examples of how UK entities can be used are detailed below:

UK Resident Companies

Since 1 April 2017 the corporation tax rate has been 19%.

There are generous allowances for investment in R&D by small and medium sized entities. The tax relief on allowable R&D is 230%. That means that for every £100 spent on R&D you can claim a tax deduction of £230.

Where a company makes a profit from exploiting potential inventions those profits may be taxed at 10% rather than at the normal corporate tax rate.

UK Controlled Foreign Company Laws have been reformed with the aim of making the UK tax system competitive for multinationals.

There are no withholding taxes on dividends paid from the UK by companies.

UK Holding Companies

The UK has a participation exemption for foreign income dividends. The conditions for this vary according to whether the company is small or large.

As a result of this exemption most foreign dividends will be exempt from UK taxation when received by UK-resident companies. Where the exemption regime does not apply, foreign dividends received by a UK resident company will be subject to UK corporation tax, but relief will be given for foreign taxation including underlying taxation where the UK company controls at least 10% of the overseas company.

No capital gains tax is payable on the disposal of a trading company by a member of a trading group, subject to minimum holding requirements. This relates to disposal of all or part of a substantial shareholding in another trading company, or the disposal of the holding company of a trading group or sub-group.

UK Limited Liability Partnerships (UK LLP)      

A UK limited liability partnership is a separate registered legal entity with an address in the United Kingdom. No personal liability falls on a member of an LLP for the contracts or debts of the LLP.

As long as the UK LLP operates in a commercially orientated manner, e.g. carries on a business with a view to generating profit, the members will be treated for tax purposes as if they are partners. A non-resident partner of a UK partnership is not liable to UK tax on non-UK source income.

Therefore if a UK LLP has non-UK partners and is involved in non-UK trading (carried out entirely outside the UK), there will be no UK taxation on its members.

Non-Resident Companies

A UK non-resident company is one that is incorporated within the UK but is deemed to be resident in another country. This occurs when the effective management and control of a company is carried out in another country which has a Double Tax Agreement (DTA) with the UK. The DTA needs to specify that the country of residence of the company is that in which the effective management and control takes place.

Valuable tax planning opportunities are presented where there are treaties with countries offering low corporate tax rates, such as Cyprus, The Netherlands, Portugal and Switzerland. Malta also provides similar opportunities due to the Maltese system of tax refunds.

UK companies which are able to obtain a Certificate of Residence from a competent authority in one of these countries are not liable to UK tax other than that due on UK sourced income.

The UK non-resident company, therefore, offers a respectable and reliable legal personality, together with low taxation, depending on the treaty country used.

Formation of Companies in the UK 

General information is detailed below, outlining the formation and regulation of UK companies, as embodied in the Companies Act 1985 and Companies Act 2006, where currently in force.

  1. Incorporation

Incorporation normally takes five working days, although same day incorporation is possible for an additional fee.

  1. Shares

Shares are registered and a shareholders’ register is maintained at the registered office.

  1. Shareholders

A minimum of one shareholder is required for a private limited company.  There is no maximum number of shareholders.

  1. Registered Office

A registered office is required in the UK and can be provided by Dixcart.

  1. Meetings

There is no restriction as to the location of meetings.

  1. Accounts

Annual accounts must be prepared and filed with Companies House. A company may qualify for an audit exemption if it fulfils at least two of the following criteria:

  • An annual turnover of no more than £2million.
  • Assets worth no more than £5.1
  • 50 or fewer employees on average.

An Annual Return must be filed each year.

  1. Company Name

Any name may be chosen, provided that it is not the same as, or too similar to, any other company name currently in use.  Certain words, however, such as ‘Group’ and ‘International’ require special permission.

  1. Taxation

The “main rate” of corporation tax is shown in the table below.

MAIN RATE
Financial Year to 31 March 2020 19%

If you would like additional information regarding the formation of companies in the UK and the fees charged by Dixcart, please contact advice.uk@dixcart.com

Please also see our Corporate Support Services page for further information.

Updated: November 2019