International Spring 2012 ach The Reeves newsletter designed to help keep businesses and individuals up to date with international issues Welcome Welcome to International Reach, our newsletter for businesses and individuals with international needs. Our clients have global requirements and with over 25 years experience of working internationally and through our membership of Kreston International (see page 4) we look after these requirements daily. However the question we get asked most often in regards to international business is “why should we set up our business in the UK?” Therefore this edition of International Reach focuses on that very question. Members of our International Team will also be attending the following events this coming year: • Kreston EURAFNE Conference, 17-20 May, Cyprus • Kreston Latin American and CBIZ/MHM Conference, 9-12 July, Miami • Kreston International World Conference, 11-14 September, Beijing Clive Stevens, Chairman of Kreston International Why the UK is the best place for your business The United Kingdom continues to be one of the world’s leading locations for global investment, being rated again as the most attractive place in Europe for foreign investment 1 and being ranked by the World Bank as the number one country in the EU and G8 for ease of doing business. The UK’s attractiveness is global and in 2011 the UK attracted investment from 54 different countries with the total capital stock of Foreign Direct Investment (FDI) projects in the UK in 2011 being valued at £720 billion. These projects created and safeguarded more than 94,500 jobs in the UK and inward investment supports over 30 per cent of the UK’s economic output. So international business and investment is hugely important to the UK economy and Government understands that and so is continually looking at ways to further improve the attractiveness of the UK to overseas business. There are many factors which make the UK so popular to international business and in the following pages we look at the following factors: • Competitive tax regime • Government supported Enterprise Zones and grants • Supporting technology, creativity and innovation • Gateway to Europe • UK labour market and immigration rules Source: 1 UKTI Investment Report 2010/11 an independent member of www.reeves.co Spring 2012 Spring 2012 Competitive tax regime The current Government has set out their goal of making the UK the most competitive tax regime in the G20 and this is highlighted by the following key areas which make the UK a tax advantageous place for international business: Supporting technology, creativity and innovation • The UK has the one of the lowest “main” rates of corporate tax in the globe, currently at 24% for the 2012/13 tax year which will continue to reduce by 1% annually for the next two years until it reaches 22% in 2014/15. Below you can see how the current main corporate tax rate compares to other countries around the globe. The UK has always been a centre for innovation and technology and the majority of new inward investment projects in the UK are in the sectors of ICT, software, technology and life sciences. This has been greatly enhanced by tax incentives and benefits to attract those businesses who want to innovate. These include: • A generous system of Research & Development (R&D) Tax Credits, whereby small/medium enterprises (SME’s) can reclaim up to 225% of the costs of R&D when calculating their taxable profits. Large companies also look set to benefit from 1 April 2013 with them being allowed to make an “above the line” deduction for their R&D expenditure. • A new “Patent Box” regime will allow corporate income and gains generated from patents to be subject to a special Corporation Tax rate of 10%. This will come into effect from 1 April 2013. • Grants and funding available for business once in the UK, through Government agencies such as the Technology Strategy Board which offers investment funds and programmes to innovative businesses • Corporation tax reliefs which will come into effect from 1 April 2013 for businesses in the video games, animation and high end television industries. • The development of world leading technology and innovation centres including the Catapult centres and Tech City in East London, which attract a critical mass of innovative businesses to create centres of global technological excellence. Based on 2012/13 tax rates and includes average “local/state” taxes for those regions that impose them Government supported Enterprise Zones and grants • The UK has the largest network of tax treaties for the avoidance of double taxation globally • Virtually all foreign dividends received by a UK parent company are exempt from UK corporation tax • The UK does not impose withholding tax on outbound dividends • A UK company selling shares in a trading subsidiary company is exempt from tax on any gain made through the UK’s Substantial Shareholdings Exemption • The UK has reformed its Controlled Foreign Company (CFC) rules ensuring that true business profits of any overseas subsidiary companies generally do not fall within the UK tax regime As part of the UK Government’s agenda to boost growth and support business there are “Enterprise Zones” established across the UK. These zones offer businesses simplified planning rules, super fast broadband communications and tax breaks and incentives to new business looking to develop there. These zones are located across the country including zones in London, Kent and across the South East of England. • The UK is reducing the higher rate of personal income tax by 5% (down to 45%) from 1 April 2013 • By undertaking proactive tax planning before entering the UK there are potentially significant tax planning opportunities available for non domiciled individuals coming to work in the UK, however this advice and planning must be in place before the individual enters the UK Gateway to Europe Also Businesses that are based in the UK can access a wide range of discretionary grants and incentives from the devolved government agencies, local development agencies and local business support organisations. In England companies with substantial investment projects can apply for financial assistance through the Regional Growth Fund, a £1.4 billion three year fund looking to stimulate private sector led growth. UK labour market and immigration rules The UK offers easy access to the 27 member states of the European Union, the world’s largest single market. Historically the UK has been the number one destination for setting up a business that is looking to develop into the European market due to its world-class transport links – including 7 international airports around London and Kent and also high-speed rail links around the South East directly to Europe. an independent member of The UK is recognised as having one of the worlds’ most flexible labour markets and has also put in place a new “fast track” Visa system for investors and entrepreneurs that are looking to set up a business in the UK. an independent member of www.reeves.co www.reeves.co Spring 2012 Meet the International Team at Reeves Clive Stevens Managing Partner and Chairman of Kreston International Email: [email protected] Tel: +44 (0)1634 899800 Andrew Griggs International Audit, Funding and Transactions Email: [email protected] Tel: +44 (0)1634 899800 Margaret Connolly Head of International Corporate Tax and Transfer Pricing Email: [email protected] Tel: +44 (0)1227 768231 Michael O’Brien International Outsourcing and Expansion Email: [email protected] Tel: +44 (0)20 7382 1820 Nigel Fright International Audit Email: [email protected] Tel: +44 (0)1227 768231 Clive Relf International Personal Tax Email: [email protected] Tel: +44 (0)1227 768231 Geraint Jones International Personal Tax Email: [email protected] Tel: +44 (0)20 7382 1820 Greg Mayne Head of Indirect Tax, Duty and Excise Email: [email protected] Tel: +44 (0)1227 768231 If you have any queries about setting up your business in the UK or indeed any international matter then please get in contact with one of our team above. Also if you would like a copy of our factsheet, “Setting up your Business in the UK – What are the issues you need to consider?” then please email [email protected] and we will send a copy out to you. UK Trade & Investment UK Trade & Investment (UKTI) works with UK-based businesses to ensure their success in international markets, and also to encourage the best overseas companies to look to the UK as their global partner of choice. It offers tailored solutions to each business, giving them in depth guidance and advice on their sector as well as introducing them to key advisors and business leaders. Our expertise in working with International businesses has also been recognised by UKTI and we are very proud to have been approved as members the UK Advisory Network, which has been set up by UKTI and in their words “consists of members with essential knowledge and invaluable expertise”. www.ukti.gov.uk About Reeves Reeves is one of the major accountancy and financial services firms practising in London and the South East of England. Established over 100 years ago we have built a growing reputation for our award winning tax and financial advice on a national and international level. Today we have offices in London, Kent and Gatwick and we employ over 300 staff including over 40 partners. The firm has a wealth of experience in assisting businesses and individuals with international requirements. Kreston International Reeves is one of the longest serving members of Kreston International, a global network of independent accountancy firms and business advisers. Currently ranking in the top 15 largest accounting networks in the world it covers over 90 countries and has over 700 offices providing a resource of 19,500 professional and support staff. Our membership of Kreston International allows us to look after the global needs of our clients. www.kreston.com Reeves & Co LLP (the Firm) is a Limited Liability Partnership registered in England and Wales with registered number OC328775. Registered to carry on audit work and regulated for a range of investment business activities by The Institute of Chartered Accountants in England and Wales. Registered office: 37 St Margaret’s Street, Canterbury CT1 2TU. Reeves Financial Planning Limited, which is wholly owned by the Firm, is authorised and regulated by the Financial Services Authority. Registered in England and Wales with registered number 03852054. Registered office: 37 St Margaret’s Street, Canterbury CT1 2TU.