expand business to the uk

5 Reasons to Expand Your US Business to the UK

By Heather Landau

If you’re thinking of expanding your U.S. business to Europe, the U.K. — and more specifically London — is likely to rank highly on your list. Over 8,500 U.S. businesses now call the English capital home, and companies including Airbnb, Linkedin and General Assembly already have offices in Europe’s fastest growing digital cluster.

While the EU transition may cause concern for business owners, there remains an exciting opportunity for U.S. businesses to expand their market in a fairly familiar setting. And although nobody can be certain of Brexit’s effects on businesses, there are many reasons why expanding your U.S. businesses to the U.K. could benefit its future growth — and enhance its global presence.

1. Tech Business Boom and Digital Economy

With a thriving startup scene of over 2,000 companies and 50,000 plus digital tech employees in East London’s Silicon Roundabout, London is an attractive place for tech businesses of all stripes. As the fintech capital of the world and heart of Europe’s tech scene, you’ll struggle to find a better location this side of Silicon Valley.

The digital economy is moving forward quickly – growing twice as fast as the wider economy. London’s tech scene also reached an all-time high in venture capital investment last year at £2.99 billion, and gained more venture capital investment than Germany, France, Spain and Ireland combined. And with Amazon and Facebook announcing plans in late 2017 for expansion to the UK capital, London’s tech scene continues to grow alongside some of the biggest names.

While London may seem like the de facto choice for tech companies, success stories are emerging throughout the country, from digital media to cyber security. Edinburgh for example is home to billion-dollar companies such as Skyscanner, and rising startups including Administrate and TV Squared. Manchester allone has 50,000 people working in the digital economy, and the sector as a whole offers 1.56 million jobs – three times more than the wider economy.

Manchester is also a fast-growing tech hub and home to MoneySuperMarket, whilst Newcastle houses mobile payment firm ImpulsePay. Liverpool is a flourishing area for gaming, and Cambridge has one of the country’s most mature tech ecosystems. Home to the one of the U.K.’s most prestigious universities, Cambridge has produced some of the country’s most successful digital companies in recent years, including world-renowned chipmaker ARM.

2. Recruitment and the Workforce

The U.K. has the second largest workforce in the EU at 30 million, with a wide pool of skilled employees — and is also expected to have a labour growth in the next 15 years.

The country has flexible labour laws that can help suit companies needs, while labour costs are the most competitive in Western Europe, a benefit of low employer social security contributions. With an overall lower labour cost, and more flexible laws than many other European countries including France, Ireland, the Netherlands and Germany, the U.K. is expected to thrive even without the EU’s talent pool.

Despite a slight fall in unemployment over the past decade, U.S. companies will find little difficulty in recruiting local staff in the U.K. The country’s recruitment sector is thriving, while British workers are generally well educated, and able to adapt to various management styles.

3. Gateway for the World

London can create the connections to expand your business worldwide. The U.K. capital has excellent transport links to Europe and Asia, and could provide further expansion opportunities. London has many industry sectors including tech, finance, green energy, hospitality, and creative fields — meaning that whatever your niche is, the business should fit in quite nicely.

If your business’ aim is to establish a global brand, having a base in two major locations — the US and UK — will position you well for global expansion. The U.K.’s trade connections are a big part of this: reports from Trading Economics concluded exports from the U.K. grew by 2.2% to an all-time high of £51.58 billion in September 2017, up from £50.49 billion in August.

This leaves a substantial opportunity to export your goods to other countries worldwide, and go on to dominate the global market. U.K. products have a reputation for quality, particularly in certain areas. Thirty-nine precent of international consumers would be more inclined to buy a product with the Union Jack, with food products topping the list (yes, the U.K. does have some!), and fashion and automotive industries also set to reap the rewards.

It’s hard to avoid Brexit as a concern, and it remains a lingering uncertainty for businesses. But while the Pound Sterling has fallen since the vote, British goods have become more competitive and sought-after overseas as a result, and promising export opportunities have risen.

4. Financial Security

Britain currently has the fifth largest economy in the world, and has largely shrugged off economic uncertainty, entering 2018 in good health. The U.K.’s economy is stable, and rose by 0.1% in the first three months of 2018.

London remains the world’s leading financial centre, and banks from most countries have offices here. The banking facilities are excellent for the business community, with immediate support and options for any financial woes you may have.

U.K.’s tax rates are one of the biggest benefits for incorporation. Corporation tax is currently at 19% in the U.K., and is the joint lowest in the G20. The U.K. also has double taxation agreements with many destinations worldwide, including Ireland, France and India.

These treaties mean many countries won’t demand that you pay tax twice on the same income, and some may even agree to exempt income or gains from tax. For U.S. businesses expanding to the U.K., it allows you the freedom to trade freely with other countries, without worrying about being taxed twice on the same income.

The current VAT rate is 20% and payable on most goods and services in the U.K., and also may occur for imported goods. For research and development (R&D), there are many tax incentives available which apply across all industry sectors. They mainly focus on small or medium businesses, which can claim an enhanced deduction of 230% of qualifying R&D expenditure.

5. Welcoming Environment for Entrepreneurs

One of the most attractive benefits of expanding to the U.K. is its open attitude to a wide range of businesses, cultures and aspiring entrepreneurs. The U.K. government is welcoming many U.S. entrepreneurs to the U.K. with entrepreneur visas and a special tax rate. The ‘capital gains’ tax rate will stand at 10% for the first £10 million in sale value – half of the standard corporation tax rate.

The U.K. has seen a wide variety of industries flourish, including fintech, construction, oil and gas, healthcare and manufacturing. The welcome you receive here — and the success of your products or services — may be just the beginning for your business’ global dominance.

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Heather Landau
Open A European Company.com founder Heather Landau has honed her skills in service advisory from the pragmatic to the practical. With 25 years experience in international marketing and business development, Heather is a leading voice on company incorporation in the UK, and operates similar services across Europe.

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