I recently met some friends who are interested in trade, retail and e-commerce in the UK.
The reason is that they have been doing certain types of business in Hong Kong, and some clients have come to the UK. After arriving in the UK, those customers still want to buy the products they have been using in Hong Kong, such as skin care products, cosmetics, etc.
As a merchant, if there are enough customers in the UK, you may consider setting up a company in the UK. The reason could be that you need to find a business location to handle the goods. If the goods have already arrived in the UK, it will be much faster to be supplied to the customer at that time.
Therefore, I would like to share about the differences between the UK companies and Hong Kong companies. Hopefully it’s useful for you.
There are many similarities between Hong Kong companies and the UK companies.
For example, if there is only one person being the sole shareholder and director, you can register the company without looking for local directors or shareholders. Unlike some countries in Southeast Asia, such as Singapore, local directors are required to register a company, and Thailand, for example, requires local shareholders.
Therefore, it is very convenient for foreigners to register a company in the UK.
Another similarity is that there are significant controller disclosures. Taking a one-person company as an example, the significant controller would be the same person who is both a director and a shareholder. In addition, a local registered address is required, which is required all around the world.
The registered address can also be a residential address or a business center address. There are different service providers that can provide a registered address, which is the same as in Hong Kong.
In addition, both Hong Kong companies and UK companies have to do annual declarations, which are called Annual Return in Hong Kong and Confirmation Statement in the UK.
In addition, everyone has to declare company tax every year, which is called Profit Tax in Hong Kong, and Corporation Tax in the United Kingdom.
Let’s talk about the differences. We just mentioned taxes, so let’s talk about tax rates first. The UK Corporation Tax is 19%, and the Hong Kong Profit Tax rate is lower than 19%. The first 2 million HKD profit is 8.25%, and the profit above 2 million HKD is 16.5%.
Another tax to pay special attention to is VAT. Hong Kong does not have VAT. However, under the UK system, you should be aware that if the company’s annual turnover exceeds 85,000 pounds, it needs to register for VAT.
The VAT rate depends on what products are sold, and there are different levels. Some products are 0%, some products are 5%, and some products are 20%. In most cases, VAT is 20%. Therefore, if the annual turnover needs to be registered for VAT, remember to add the VAT when issuing the invoice.
Sometimes some business models are B2B, company-to-company business. The other party may pay attention to whether VAT is added to the invoice. Having VAT means that the company has reached a certain scale, which may increase confidence in the company.
In addition, the United Kingdom has Dividend Tax, while Hong Kong does not. So in terms of tax, there are many differences between Hong Kong and the UK.
However, in company maintenance, UK and Hong Kong companies are relatively close.
As for dealing with Bookkeeping, the UK and Hong Kong are also very close in this regard. Therefore, it is possible to appoint a Hong Kong bookkeeping company to handle accounting. Especially with the use of an online accounting system, the information is stored in the cloud, and it will be more convenient to coordinate with the company that handles taxation in the UK. Because in the UK, online accounting systems are very common.
Above we shared the similarities and dissimilarities between UK and Hong Kong companies. If you have any questions about UK and Hong Kong companies, you are very welcome to contact us at any time.
Hope you enjoy this episode.
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