There is no specific law governing or restricting foreign investment in the U.K. Foreigners or foreign-controlled companies are treated in law exactly as UK owned businesses, and they may engage in most forms of economic activity in the U.K. However, a few industries are government-owned or controlled by the government agencies. These include some areas of transport and energy.

Foreign or British investors alike must comply with monopoly and merger rules, and specific governmental approval may be required for the takeover by a foreign investor of any large or economically significant U.K. enterprise.

Banking and Insurance concerns must obtain Financial Services Authority (FSA) and government authorization before commencing operations in the U.K.

The UK economy is not solely restricted to UK nationals, however, sectors such as defence are restricted to both foreign and UK nationals.

While there are almost no restrictions on foreign investors in the U.K. and there is an enormous amount of investment options open to all. Caution has to be taken as investors still have to fulfil certain mandatory legal requirements like:
  • Managers appointed should be U.K. nationals - but by demonstrating that the foreign managers’ skill level or experience cannot be matched by the U.K. candidates .
  • There are restrictions placed on how the owner of an interest in real estate uses or develops the land or building.
  • For a business to operate it will require the necessary building permits, licenses and planning consents.

However, the UK enjoys the privilege of being one of the leading economic nations in the world. It is also one of most dominant countries in the European Union. The UK is one of the top countries dominating the business scenario worldwide. It is one of most favoured destinations amongst the business fraternity for investment as it has excellent and far-reaching business avenues. Its business activities are spread across almost all the countries in the world. It also holds huge potential for profitable foreign investment.

The UK is one of the leading financial centres in the world and is home to the world’s largest financial centre which is situated in London.

The favourable taxation policies of the UK give it a distinct edge over other countries of the world in attracting huge foreign investment. According to the UK taxation policy, big multinational companies having an annual turnover of about 1.5 billion or more are taxed 28% on their profits. Whereas the UK government levies 21% tax on the profits of small business with an annual turnover of about 300,000. The taxation system of the UK provides tax benefits on the expenditures incurred on production and on the depreciation of assed used in the production process.

The UK has one of the best political set-ups in the world. The political system is very transparent and stable at all times. The country also has the least corruption rates.

The UK’s currency unit Pound Sterling is one of the most powerful currencies in the world. The currency commands worldwide acceptance. The British pound sterling is a free-floating currency with no restrictions on its transfer or conversion. There are no exchange controls restricting the transfer of funds associated with an investment into or out of the UK. All exchange controls were repealed in 1987.

Investors can establish a business within a fortnight. Investors setting up their business headquarters in the UK are welcomed with open arms by the government of the UK. The UK’s government has an unbiased attitude towards foreign investors investing in the country. The government does not discriminate between firms owned by foreign nationals and local UK nationals.

Having a headquarters in the UK would give business an opportunity to easily enter in and explore the European market.