The United Kingdom is full of lucrative investment opportunities. Buying an existing UK company is often easier and less risky than starting your own.
As there are no restrictions on foreign ownership, overseas investors are free to buy businesses in the UK. However, you will have to abide by UK tax laws. If you are not a British citizen and you wish to immigrate here, you will also need to apply for a visa.
At Chelsea Corporate, we have many years of experience in helping foreign nationals acquire UK businesses. In this guide, we’ll explain everything you need to know about buying a business (UK) from overseas.
Why Buy a Business in the UK?
The UK is a great place to own a business – that’s why it’s first place on the Forbes Best Countries for Business list. The United Kingdom boasts the fifth largest economy in the world, with a population of 65 million and a GDP growth rate of 1.7%. The finance sector is particularly strong, with London ranking second on the Global Financial Centres index.
If you’re interested in doing business in the UK, you have two main choices: start a new company or buy an existing one. Buying a UK business as a foreign national has several advantages:
- An existing business will have found its place in the market, and dealt with any teething problems
- It’s easier to obtain finance for a business with a proven track record and financial history
- There is less risk involved, as the brand will already have a reputation, an established customer base
- With experienced employees, market-tested products, supplier relationships and a reliable income in place, you can hit the ground running and focus on growth
The UK is home to over 5.6 million businesses in an enormous range of industries, from accountancy to transport. You’ll have plenty of opportunities to find a company that matches your interests and expertise.
Buying a Business in the UK as a Foreign National
If you’re wondering “can a foreign national buy a business in UK?” the answer is yes. Anyone from any country can buy a UK company – there are no limitations on foreign ownership.
There are two main ways to buy a business (UK): a share purchase or an asset purchase. With a share purchase, you buy all of the shares in the company and become its new director and beneficiary. An asset purchase involves buying some or all of the business’s assets (e.g. premises, stock, intellectual property) and formally transferring their ownership to you.
Both methods are available to overseas buyers, and you won’t need to travel to the UK. At Chelsea Corporate, we can help you find profitable acquisition opportunities, negotiate deals and conduct due diligence fully remotely.
Tax Considerations when Buying a Business (UK)
If you choose to buy a UK company, you must abide by UK tax laws. This means you may have to pay:
- Stamp Duty or Stamp Duty Reserve Tax when buying shares in a company
- Stamp Duty Land Tax when acquiring property as part of an asset purchase
- Corporation Tax on any profits your company makes
- VAT if the business’s taxable turnover exceeds £85,000
- Business rates on commercial premises
- Income Tax or Dividend Tax on any salary or dividends you receive from the business
- National Insurance contributions
- Capital Gains Tax if you sell any of the company’s assets
Overseas buyers of UK businesses may be subject to higher rates on certain taxes, such as Stamp Duty Land Tax. There are some reliefs and exemptions available, so seek professional advice to ensure you’re not overpaying.
What Type of Visa Do I Need when Buying a UK Business?
If you are not a British citizen, you will need a visa to immigrate to the UK after you buy a business. UK visa requirements are reasonably strict, and there are many different types available.
Until March 2019, foreign nationals who planned to buy or invest in a UK business could apply for a Tier 1 Entrepreneur visa. Unfortunately, this has now closed, along with the Tier 1 Investor visa (previously available for investments of over £2 million).
Currently, the main type of UK business visa relevant to overseas investors is the Innovator visa. However, there are alternatives available for those who do not qualify.
UK Innovator Visa Criteria
The Innovator visa is designed for foreign nationals who wish to run a business in the UK. It grants you permission to live in the UK for 3 years, after which time you can apply to extend your stay. The eligibility criteria are as follows:
- Your business idea must be new, innovative and viable, and endorsed by an approved body
- You must be at least 18 years old, and possess sufficient knowledge of the English language (reading, writing and speaking)
- You must have at least £50,000 in investment funds, and enough personal funds to support yourself while living in the UK
The primary aim of the Innovator visa is to support new businesses. However, you may still qualify if you plan to acquire and run an existing UK company.
Alternatives to the Innovator Visa
If you do not qualify for the Innovator visa, you may be eligible for one of the following:
- UK Ancestry visa – if one of your grandparents was born in the UK
- Global Talent visa – if you are a leader or potential leader in digital technology
- High Potential Individual (HPI) visa – if you have been awarded a qualification from an eligible university in the past 5 years
- UK Expansion Worker visa (Global Business Mobility) – if you are setting up a UK branch or subsidiary of an overseas business
Alternatively, a Skilled Worker visa (designed for foreign employees of UK companies) may be an option. There are no shareholding restrictions, so you could theoretically own up to 100% of shares in the company. However, the job role must not have been created for the sole purpose of applying for a visa.
Can I Own a UK Company and Live Abroad?
It’s perfectly legal for a non-UK resident to buy, own and run a UK business from abroad. You can visit the UK for up to 6 months at a time to carry out certain business activities. Depending on your nationality, you may require a Standard Visitor visa to do this.
Even if you live overseas, you will still have to pay tax on any income you receive from your UK company. And if you visit the UK for more than 183 days per tax year, you’ll also have to pay tax on any income you earn outside of the UK.
Who Can Help Me Buy a Business in the UK?
We are Chelsea Corporate: buy-side M&A experts specialising in off-market acquisitions. Whether you want to buy a business in London, Manchester or anywhere else in the UK, we can help.
We’ll find you the perfect acquisition opportunity, carry out comprehensive background checks and liaise with the seller on your behalf. Because we work for you, the buyer, we’ll always strive to get you the best deal possible. For overseas clients, we can even negotiate and close deals entirely remotely.