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A guide on how to start a business in the UK as a foreigner

5-minute read

Simply Business Editorial Team

19 April 2021

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The UK is often seen as an attractive place to start a business, but there are challenges for foreign nationals. Here’s our guide on how to start a business in the UK as a foreigner.

There are specific visas available for foreign nationals who want to start a UK business. And while EU citizens were previously free to live and work in the UK without a visa, Brexit means that they’re now subject to the same rules as non-EU citizens.

But it’s not impossible for foreign nationals to set up a business in the country – read about your options below.

Starting a business in the UK as a foreigner

You can get going with the following steps:

  1. Think about whether you need a UK visa. EU nationals who were living in the UK before 1 January 2021 may be able to apply for the EU Settlement Scheme, but most foreign nationals will need to apply for a work visa before they can set up a business. You can read more information on visas below.
  2. Apply for the correct visa if required. If you do need a visa, you should apply ahead of time. Visas for entrepreneurs include the Start-up visa and Innovator visa.
  3. Consider your business's legal structure. Once you’re legally allowed to start a business in the UK as a foreigner, you can actually get going. If you already know what your business will do, your first step is to decide on a legal structure. Read more about choosing a legal structure for your business.
  4. If you’re setting up a limited company, you need to incorporate your business. This involves registering with Companies House.
  5. Get up to speed on your tax obligations. You need to register for Corporation Tax if you're incorporated, and whatever your structure, self-employed people need to register as a Self Assessment taxpayer with HMRC.

What if EU citizens want to start a UK business?

The Brexit transition period ended on 31 December 2020, so new rules started on 1 January 2021.

This means that people from the EU, Switzerland, Norway, Iceland or Liechtenstein who now want to start a business here will have to apply for a visa, in the same way as non-EU citizens.

The exception is if you or a close family member started living in the UK before 1 January 2021. If that’s the case, you might be able to apply for the EU Settlement Scheme. This is free, but the deadline to apply is 30 June 2021.

What are investor, business development and talent visas?

Foreign nationals can’t apply for the Tier 1 (Entrepreneur) visa anymore, as it’s been replaced by the Innovator and Start-up visas.

You’ll usually get a decision on your visa within three weeks, if you’re applying from outside the UK.

Innovator visa

This visa is for those who want to start an innovative business in the UK. The business needs to be different to anything else on the market, and an approved body has to endorse your idea.

Eligibility criteria are strict. You must have access to at least £50,000 in investment funds and prove where this funding came from.

You should also have enough personal savings to support yourself. You’ll be asked to prove that you’ve had at least £1,270 in your bank account for 28 consecutive days before you apply for, extend, or switch to this visa.

You also need to be able to speak, read and write English to to level B2 on the Common European Framework of Reference for Languages (CEFR) scale.

There’s a big fee to apply for the visa, too – it’s £1,021 (£1,277 if you’re extending or switching), although this reduces by £55 for foreign nationals of some countries (including France, Germany and Spain).

You can stay in the UK for three years on an Innovator visa and there’s no limit to the number of extensions.

Read more about the Innovator visa at gov.uk.

Start-up visa

This visa is similar to the Innovator visa in that you need to have an innovative business idea that’s different to anything else on the market.

There’s no investment funding requirement, but you have to prove you’ve had at least £1,270 in your bank account for 28 consecutive days before you apply for (or switch to) this visa.

Plus, you need to be endorsed by an authorised body that’s either a UK higher education institution or a business organisation that supports UK entrepreneurs.

You can only stay for two years and can’t extend the visa, although you may be able to switch to an Innovator visa.

The English language requirement is the same as the Innovator visa (level B2 on the Common European Framework of Reference for Languages (CEFR) scale).

Fees are dramatically lower than the Innovator visa, at £363 to apply or £493 to switch, and there’s the same £55 reduction for eligible countries too.

Read more about the Start-up visa at gov.uk.

Global Talent visa

You can apply for a Global Talent visa if you’re a leader, or potential leader, in:

  • academia or research
  • arts and culture
  • digital technology

Your application has to be endorsed by a relevant authority with expertise in your field. While the Home Office handles this for you, how you apply depends on your field.

People on a Global Talent visa can be self-employed or directors of companies and can live and work in the UK for up to five years at a time.

Read more about the Global Talent visa at gov.uk.

Tier 1 (Entrepreneur) visa

This is no longer available, although those currently in the UK with this visa can apply to extend theirs.

You’ll need to be eligible and fulfil certain criteria. You should:

  • have invested at least £200,000 in a UK business (excluding any commercial property or director's loan), or £50,000 if your initial application was based on having funds from an approved funding source
  • have registered as a director or as self-employed no more than six months after you were given permission to stay in the UK under the original visa
  • prove you’ve been self-employed, a member of a partnership or working as a director of a business three months before you apply
  • have created at least two full-time jobs that have existed for at least 12 months

Read more about the Tier 1 (Entrepreneur) visa at gov.uk.

Foreign nationals can then start a business

When you know you’re legally allowed to live and work in the UK, you can then start a business as a foreigner.

We have lots of guides on our Knowledge centre that can help. Why not read:

Remember that there are wide-ranging regulations on living and working in the UK as a foreign national.

Immigration laws are strictly enforced, so make sure you keep yourself updated. You should get professional legal and financial advice if you’re not sure about anything.

Are you going to start a business in the UK as a foreign national? Let us know in the comments below.

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We create this content for general information purposes and it should not be taken as advice. Always take professional advice. Read our full disclaimer

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