UK Company Incorporation for Indians: Who Needs It and Who Does Not
Whether UK Company Incorporation for Indians applies to a given business is the first thing worth settling, and it is where most of the early questions land. The questions below are the ones raised most often in practice; the full scope of the service is on the UK Company Incorporation for Indians page.
What is a UK Limited Company — and how does it differ from an Indian Private Limited Company?
Both are private companies limited by shares, with shareholders' liability limited to the amount unpaid on their shares. Key differences: UK company law (Companies Act 2006) governs UK Ltd; Indian Companies Act 2013 governs Indian Pvt Ltd. The UK has no equivalent of INC-20A or the mandatory commencement of business declaration. UK companies must file a Confirmation Statement annually rather than a separate annual return form. The UK also requires disclosure of PSCs (People with Significant Control) to Companies House; India has a comparable regime — significant beneficial owner (SBO) reporting under Section 90 of the Companies Act 2013 — though the thresholds and mechanics differ. UK statutory accounts can be simplified for micro-entities and small companies; Indian companies always require full statutory audit by a Chartered Accountant regardless of size.
In practice: Indian CA professionals are not qualified to practice UK accountancy or UK tax. PNPC works with UK-side professional associates for the UK statutory accounts and CT600 while retaining end-to-end coordination so the client deals with one point of contact.
Does a UK company need a UK-resident director?
No. The Companies Act 2006 does not require any director of a UK private limited company to be UK-resident, a UK citizen, or even a UK national. Any individual aged 16 or over, of any nationality, may be appointed director, but since 18 November 2025 a new director must verify their identity with Companies House before the appointment is notified. A UK-incorporated company is UK tax resident under the incorporation rule (CTA 2009 s.14); the 'central management and control' test decides residence only for companies incorporated outside the UK. However, a UK company whose sole director is Indian-resident and manages it from India may also be Indian resident under the place of effective management (POEM) test, and that dual residence then has to be resolved under the India-UK DTAA tie-breaker — with the outcome deciding where the company is taxed and which treaty benefits it can claim.
In practice: A UK-incorporated company is UK tax resident under UK law, but a UK entity managed from India by Indian-resident directors can also be Indian tax resident under POEM, creating a dual-residence position that must be resolved under the treaty. This is worth assessing at the pre-incorporation stage, before the board and management arrangements are set.
When does a UK company need to register for VAT?
VAT registration becomes mandatory when the company's UK taxable supplies in any rolling 12-month period exceed the registration threshold — currently £90,000 (as of 2024; this threshold has increased over the years and should be verified at the time of application). Once the threshold is crossed, the company must register within 30 days of the end of the month in which the threshold was exceeded. Voluntary registration below the threshold is possible and often beneficial for B2B businesses that want to reclaim input VAT on UK purchases and signal credibility to UK business customers. Businesses not established in the UK that make taxable supplies in the UK (including digital services to UK consumers) generally must register under the non-established taxable person (NETP) rules regardless of turnover.
In practice: The VAT registration threshold has changed multiple times. We always verify the current threshold before advising on mandatory registration timing. Voluntary VAT registration for early-stage B2B clients is often our recommendation — the cash flow benefit from reclaiming VAT on professional fees, software subscriptions, and office costs often outweighs the administrative burden.
What is Making Tax Digital (MTD) for VAT — and does it apply immediately?
Making Tax Digital for VAT requires all VAT-registered businesses in the UK to keep digital VAT records and submit VAT returns using MTD-compatible software (rather than the old manual HMRC portal). MTD for VAT has applied to all VAT-registered businesses since April 2022, so a newly registered company must keep digital records and file through MTD-compatible software from its first return. PNPC advises on suitable software and ensures MTD compliance from the first return.
In practice: MTD is a significant practical change for Indian promoters who are used to GST filing via offline tools. We help clients set up cloud accounting software (typically Xero or QuickBooks UK) from day one and ensure automated VAT return filing — eliminating manual filing errors and late submission penalties.
What is the People with Significant Control (PSC) register — and what does it require?
Under the Companies Act 2006 as amended by the Small Business, Enterprise and Employment Act 2015 and the Economic Crime and Corporate Transparency Act 2023, every UK company must identify the people (or entities) who have significant control over it and report them to Companies House. A person has significant control if they: directly or indirectly hold more than 25% of shares; directly or indirectly hold more than 25% of voting rights; directly or indirectly hold the right to appoint or remove the majority of the Board; or otherwise exercise significant influence or control. Since 18 November 2025 companies no longer keep their own PSC register — the Companies House register (publicly visible) is the record, changes must be notified within the statutory time limit, and PSCs must verify their identity with Companies House. Failure to comply with the PSC obligations is a criminal offence.
In practice: For standard India-promoter UK companies where the Indian individual or Indian company holds 100% of UK shares, the PSC register is straightforward — the Indian investor is the PSC. Where there are multiple shareholders or complex holding structures (Indian HoldCo → UAE SPV → UK Ltd), the PSC analysis requires care — and sometimes the PSC is not the immediate UK shareholder but the ultimate beneficial owner several layers up.
Does FEMA apply to Indian residents who want to own shares in a UK company?
Yes. Any investment by an Indian resident (individual or company) in a foreign entity — including subscribing to shares in a UK company — is classified as Overseas Direct Investment (ODI) or Overseas Portfolio Investment (OPI) under the FEMA Overseas Investment Rules, 2022. For ODI under the automatic route, the investment must be in a bona fide business activity and made through a designated Authorised Dealer bank. An Indian entity's total overseas financial commitment is capped at 400% of its net worth as per its last audited balance sheet; a resident individual invests within the Liberalised Remittance Scheme limit and only in an operating entity not engaged in financial services. The investment must be reported in the prescribed form (Form FC under the 2022 framework) through the AD bank within the prescribed time. Annual Performance Reports must be submitted to the AD bank by 31 December each year covering the financial performance of the overseas entity. Contravention of FEMA ODI rules is compoundable and may attract significant penalties.
In practice: FEMA ODI is non-negotiable. A common gap is incorporating the UK company first and only discovering the FEMA obligations months later — sometimes after the Annual Performance Report deadline has already passed. We initiate FEMA compliance at the same time as the UK incorporation so no obligation is accidentally missed.
What is an Annual Performance Report (APR) and when must it be filed?
An Annual Performance Report is a mandatory annual filing under FEMA Overseas Investment Rules, 2022, that an Indian investor (ODI) in an overseas entity must submit to their Authorised Dealer (AD) bank by 31 December each year — covering the financial year ending in the preceding period. The APR captures audited accounts of the overseas entity (or management accounts if audit is pending), return on investment, any changes in control or shareholding, and dividends remitted. Late or missing APRs are a FEMA contravention — compounding fees and RBI correspondence follow.
In practice: The APR requires the overseas entity's audited accounts — or at minimum its management accounts. For a UK company with a December year-end, the APR submission overlaps with the accounts preparation. We coordinate the UK accounts preparation specifically to meet the 31 December APR window for Indian clients, which UK-side accountants unfamiliar with FEMA timelines may not anticipate.
What UK taxes does a non-resident director pay on income received from the UK company?
A non-UK-resident director who receives a salary or director's fee from a UK company for duties performed in the UK is subject to UK income tax under the UK's non-resident withholding rules, with PAYE applicable on UK-source employment income. If the director performs all duties outside the UK, the income may not be UK-taxable. Dividends received from the UK company are generally subject to 0% UK withholding tax (UK does not withhold on dividends to non-residents under domestic law as of 2024). However, the Indian resident director will need to assess: (1) whether the dividend is taxable in India (yes — at applicable slab rate), and (2) whether any foreign tax credit is available under the India-UK DTAA — since the UK does not withhold tax on dividends, there is usually no UK tax on the dividend itself to credit.
In practice: The India-UK DTAA Article 10 covers dividends — UK domestic law currently imposes no withholding on dividends, so treaty relief on outbound UK dividends is not typically an issue. The bigger question is how the Indian director's income from the UK company (salary, fees, dividends) is reported in India — which we manage as part of the cross-border engagement.
Is a UK company required to have a Company Secretary?
No. Since the Companies Act 2006, private limited companies in the UK are not required to appoint a Company Secretary. The role is optional for private companies. Many smaller UK companies (especially those with Indian or UAE promoters) operate without a company secretary. For public limited companies, a qualified company secretary remains mandatory. However, some Companies House filings and formalities — the Confirmation Statement, director change notifications, PSC updates — require attention to detail that a company secretary would traditionally manage; PNPC's annual compliance retainer covers all of these obligations for private companies without the need for a separate secretary appointment.
In practice: While not mandatory, the registered office service provider often performs a quasi-company-secretary role — receiving post, forwarding documents, and maintaining the public register entries. We coordinate with the registered office provider on behalf of clients so nothing is missed.
Where this sits in the wider engagement
UK Company Incorporation for Indians rarely arrives on its own. The statutory basis and the current requirements are set out on the UK Company Incorporation for Indians service page, and the related services are grouped under Business Setup.
What PNPC does
PNPC Global has practised since 1986 across India and the UAE. On UK Company Incorporation for Indians we take the work end to end — reviewing the facts, preparing and filing what is required, and dealing with the authority through to closure.