Self-employed worker in the United Kingdom
The UK now has more than 4 million self-employed workers, resulting from a very business-friendly dynamic in the country. Four different statutes are offered to entrepreneurs.
Self-employed
This status corresponds to the equivalent of the individual entrepreneur in France.
To register as a self-employed, you just need to get to HMRC, which will provide a UTR (Unique Taxpayer Reference) number.
The self-employed is taxed on his/her income tax profit according to the progressive scale from 20% to 45%, and in respect of social contributions of class 2 and 4.
The rates of social security contributions are as follows for 2017/2018:
• Class 2: £3 per week
• Class 4: 9% on profits in the amount of £ 8,632 to £ 50,000 then 2% beyond
The advantage of this status is simplicity of operation. However, it can be expensive from a tax and social point of view. Moreover, the responsibility of the entrepreneur is unlimited.
Limited liability partnership (LLP)
This status allows several partners to associate to carry out their activity.
The minimum capital is £1 and the minimum number of partners is 2.
From a tax point of view, this structure is fiscally transparent. This means that the partners must register individually as self-employed and impose their share of income on an individual basis.
The liability of the partners is limited to the amount of their contributions.
The advantage of this status is the limited liability as well as its flexibility especially as the distribution of profits can be determined by the statutes. However, as for self-employed status, it can be expensive from a tax and social point of view.
Private limited company (Ltd)
This structure has a legal personality distinct from that of its partners. This is the equivalent of the SARL in France.
The minimum capital is £1 and the minimum number of partners is 1. The liability of the partners is limited to the amount of their contributions.
It is taxed on its profits to corporation tax. In 2019/2020, the rate is 19%.
The director must be an individual. It is remunerated by salaries and dividends.
The advantage of this status is the limited liability as well as the optimization from a fiscal point of view between wages and dividends. The disadvantage is the more complex operation and the higher costs.
Public limited company (PLC)
This structure makes it possible to offer its shares on the financial markets. It is the equivalent of SA in France.
The minimum capital is £50,000 and the minimum number of partners is 2. The liability of the partners is limited to the amount of their contributions.
In the same way as for the Ltd, it is taxed on its profits to corporation tax.
It must be composed of at least two directors, one of whom must be an individual rather than a corporate director.
The advantage of this status is the possibility of raising funds in the financial markets. The disadvantage is the stricter regulation to which the company is subject and the vulnerability to hostile takeovers. In addition, the accounts must be audited by an auditor.