As Brexit hangs in the balance, the UK is still a great place to invest
Back in June last year the UK voted to leave the EU in a milestone referendum. But despite some negativity, the country is still a great place to invest. Britain has always been an international trading nation and was the world’s first industrialised country. Today it is the fifth largest economy by GDP (1) and one of the most globalised economies. In the wake of the Brexit vote, the UK government’s aim is to ensure that Britain remains the top European location for international businesses.
Here are our top reasons why the UK is still a great place to invest:
- 1It’s entrepreneur friendly – The UK has successfully cultivated a great climate for international businesses and it’s never been easier to get started. According to the World Bank’s “Ease of doing business” survey in 2016, the UK is ranked 7th globally. Limited companies can be set up in as little as 24 hours, with only a £1 nominal capital investment. Thanks to its consultative approach, the UK has a stable regulatory environment that can support business’ plans and wider aims.
- 2Skilled workforce – For businesses who need access to highly skilled labour in a range of fields, the UK has much to offer. It’s home to some of the world’s leading educational establishments and research facilities, with three Universities in the top 10 of the Times University Rankings 2016/2017. Nonetheless, the UK has one of the lowest labour costs of the major European countries and is still considered by foreign skilled workers to be an attractive business environment to work in.
- 3Competitive tax rates – The UK Government is committed to creating the most competitive tax regime in the G20 and has reformed the corporate tax system to make it very attractive to international businesses. The corporation tax rate has already been on a steady decline from a high of 52% in 1982 to 20 per cent and as part of last year’s Budget, the government announced that corporation tax will fall to 17% by 2020, the lowest tax rate in the G20. The UK has flexible and competitive rules for taxing the profits of multinationals, with no withholding taxes on dividends, as well as an extensive treaty network, making the UK an attractive location for headquarters, holding companies and global business hubs.
- 4Financial Centre of the world – London is considered as the financial capital of the world, and although there has been much talk about it tumbling down the ranks after Brexit, it is by no means clear how the capital’s financial services industry will be affected until the Brexit deal is negotiated. The UK economy grew by 0.6% in the 4th Quarter of 2016 (1) and is now the fastest growing G7 economy in 2016. The British service industry accounts for almost 80% of the country’s GDP (1) and the financial and related professional services is an important component within this figure.
- 5Innovation leaders – The UK has built up a strong reputation for being leaders in research and innovation and according to the Global Innovation Index 2016, the UK is the third most innovative economy. It gives businesses and investors an opportunity to access excellent resources. There are highly competitive reliefs for innovative and high-tech industries such as, the new “Patent Box” rules, which provide favourable tax rates for profits from the exploitation of IP assets; an R&D (research and development) credit which is available as a cash refund, or reduction in corporation tax; and a wide range of creative industry tax reliefs, which were further extended in April 2016.
- 6ICT Infrastructure – The UK has an extensive broadband and ICT infrastructure and one of the strongest in the world, with extensive broadband and Wi-Fi availability throughout the country. It is one of the main criteria that influences the location decisions of internationally expanding companies.
- 7Transport – The UK has fully integrated airport, seaport, railway and road transport links to locations all over the world. Its privatised rail network, links locations within the country and also offers fast rail connections to Paris and Brussels via the Eurostar. The channel tunnel from Britain to France connects to key locations in Europe. The UK has the largest air transport system in Europe. London is its largest transport hub, with 5 international airports surrounding the city, making it the perfect location for accessing other European cities. While the UK government has yet to formally trigger Article 50 and leave the UK, their self-imposed deadline is looming. For those considering doing business in the UK, it’s worth noting that the government is acutely aware of the need to continue attracting foreign investment and business and this is likely to bring the introduction of further incentives over the coming years.
Axada has years of experience in helping firms set up and operate in the United Kingdom and the European Union. For easy access to specialist accountancy and tax services, all in one place, and to find out more about setting up a business in the UK, contact our friendly team.
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Sources: (1) IMF world economic outlook 10/16 (2) Office for National Statistics