UK vs Canada: Which Is Better For Starting A Business?

The UK and Canada are two of the world’s most dynamic economies, each home to a variety of business hubs.

As the working world gets smaller and companies are able to more easily set up shop elsewhere, you might be wondering which is better for starting a business.

Here, we talk you through everything you need to think about, so you can make that big decision just a little easier.

 

Business Environment

 

To start with, it’s probably worth taking a closer look at each of these exciting economies and how they compare.

UK: The UK, though much smaller in size than Canada, has an amazing business economy. As a finance hub on the edge of Europe, it has great relationships with countries like the US, areas of the Middle East and the rest of Europe.

Though Brexit has shaken things up a bit in terms of uncertainties, UK governments are constantly keeping an eye on, and investing in the economy.

Canada: One of the major benefits of Canada is that it is an incredibly stable economy. With close ties to the US and business hubs like Vancouver and Toronto, it’s a great option for businesses looking to break into the North American market.

However, it will be interesting to see how Trump’s government will change existing trade agreements as he adopts more “America First” policies.

 

Location

 

Another factor worth thinking about is what type of markets you want to primarily trade with. As the UK and Canada sit in two different continents, location can make a difference.

UK: The UK sits on the edge of Europe and is just 2-3 hours’ time difference from the Middle East. It also sits along the same time zone as many African Countries.

For this reason, it’s a good hub for those looking to trade in Europe, the Middle East and North Africa. The UK also has strong ties with the US, though the time difference can make things tricky, especially on the West Coast.

Canada: Canada is an incredibly strategic location for companies looking to trade in the Americas. Its major cities are on the same timezones as those in the US, making collaboration easy.

Canada also has trade deals with the US and EU, making it a solid choice for international companies.

 

 

Taxes

 

Of course, one of the biggest things that changes from country to country is the tax rate. Here’s how they match up.

UK: In the UK, companies will pay between 19 – 25% in corporate taxes.

Income taxes range between 20-45% after you’ve earned your basic allowance of £12,570. The 40% rate of tax kicks in after you earn £50,270, making it quite a costly tax environment.

Canada: Canadian corporate taxes work slightly differently, as the country has both federal and provincial tax rates.

The federal rate sits around 38%, however this is subject to a few deductions based on where your company is based and what it has earned.

Federal income tax sits between 15-33% but the high earner bracket is higher than the UK at $235,675.

Individuals also pay provincial income tax, which varies depending on where they live.

 

Cost Of Living

 

When starting a business abroad, you also need to think about the cost of living. This can impact your own expenses, as well as the costs you will need to rent offices, pay staff and more.

UK: Like anywhere around the world, Capital cities tend to be the most expensive. By quite a big chunk, London is the most expensive area in the UK, with monthly costs sitting around £2,550 for a single person, including rent. (uHomes).

Transport, food and activities are also expensive in the UK, however cities like London do also come with high wages.

Canada: Canada is a vast country, but if you’re wanting to set up a business there you’re probably eyeing up either Toronto or Vancouver.

According to MovingWaldo, The average cost of living in Vancouver is $3,793.63 per month, with the average cost of living in Toronto sitting at $3,523.17 per month. These are both expensive, but the salaries and lower income tax bands certainly help.

 

Wages

 

If you are looking to hire workers in these countries, minimum wages are worth looking into.

High wages mean businesses will need higher profits to pay staff fairly.

UK: Minimum wage in the UK sits at £10 per hour, with the living wage (for 21+) sitting at £12.21 per hour.

Based on a full work week at 7 hours a day, this would cost £477.35 per week.

Canada: Canada’s minimum wage is $17.30 per hour, with overtime commanding 1.5x this wage. Some provinces might also have their own minimum wages, so it’s worth comparing them too.

 

UK vs Canada: Which Is Better For Business?

 

When choosing between the UK and Canada, the answer is: It depends on your business!

If you are looking for a location that can help with US trade ties, Canada might be the right choice. However, if you want more global reach, the UK may be better.

Start by weighing up the pros and cons and then working out what works best for you.

Good luck!