According to sources, Napoleon once said “L’Angleterre est une nation de boutiquiers” – “England is a nation of shopkeepers”.
Whilst the number of shops on the average UK high street has certainly diminished greatly, we may well still be a nation of entrepreneurs.
In what is clearly a difficult and unstable time, according to figures the robustness of the startup sector seems to be as strong as ever.
The data over the last few years supports the contention that the British public, and those from abroad, are increasingly attracted to the notion of ‘doing their own thing’.
Between 1979 and 2016 the total register for the United Kingdom increased by almost 2.9 million companies. In fact, the total number of UK companies formed since 1844 when the structure was first created, is only about 10.5 million companies … and about half of these have been formed since 2007.
Since 2010, when understandably, the number of new companies was somewhat deflated by the financial crisis, the annual number of companies formed has risen every year from a lowly 385,741, to a record 639,658 in 2016. The 2017 figures so far are continuing this trend.
Whilst on the face of it, this is very encouraging, and bodes well for UK Inc. the reality may be somewhat different.
A favourable tax environment over the last 10 or so years has made the Limited Company vehicle an absolute ‘no brainer’. At the same time, the advent of a contractor/freelancer society (fuelled by agencies insisting on a company structure to protect clients from PAYE exposure), has further bloated the numbers as has the recent changes in the tax relief rules for property and business loans interest relief.
However, the true number of genuine new businesses may not be as great as commentators believe. This is because a proper analysis of the UK company stock has never really been carried out, nor can it be when it is based solely on the Standard Industry Classification (SIC) codes that company directors use to define their business activity – far from an accurate measure of what a company actually does.
Take out the contractors, SPVs and private landlords, and the true number of ‘new businesses’ may be considerably lower.
What is clear is that the incorporated structure is still as popular as ever and shows no signs of abating, at least for the time being.
So a nation of shopkeepers we may not be, but we do love our limited companies.