Top 10 Cheapest Cities to Start A Business In The UK

Ryan Patrick

• 11 min read
Top 10 Cheapest Cities to Start A Business In The UK

Are you considering moving to the UK to start a business but are still determining which city to go to? Studies show that new companies will thrive in cities based on various factors, including favourable local tax rates, availability of skilled labour, technological advancements, and an array of government incentives designed to foster innovation and growth.

In the UK, some cities provide more affordable environments for aspiring business owners. Our blog on 15 cheapest cities to live in the UK gives you more information on the cheapest places to live in the UK. However, this blog post explains the top 10 cheapest cities to start a business in the UK, considering local business rates, wages, office space rent, and cost of living.

Business Practices In The UK

The United Kingdom is one of the best and easiest countries to start a business. Its system possesses laws and regulations that accommodate businesses, immigrants and entrepreneurs. The UK is known for its rich culture, innovation and business-friendly environment that gives startups healthy growth within a period. This is evident as thousands of businesses are founded yearly in the United Kingdom.

According to GDP, the United Kingdom is considered a crucial market for exporting goods and services from the United States. With over 67 million people in 2022, the United Kingdom is the second-largest economy in Europe, leading the G7 in GDP growth (4.0%).

The UK offers the world's best conflict resolution, arbitration, and mediation services. The system is known for the rule of law, stability, and impartiality in the operation of its legal system.

The United Kingdom is undoubtedly a good environment for business growth and sustainability. However, there are basic practices that make the working environment suitable for business to flourish. These practices include:

1. Excellence

Excellent services is a work etiquette in the UK. This excellence is practised in punctuality, communication, business delivery and dress code in any working environment. Usually, the dress code in England is suits with shirts and ties (dark coloured).

Communication in the work and business environment is kept formal.

2. Networking

Workplace relationship is encouraged in the United Kingdom. While professional work ethics are maintained, there are opportunities for networking events, get-togethers, conferences and business lunches. The UK has a system that enables multiculturalism.

3. Healthy Work-Life Balance

Healthy work-life balance is encouraged in the business environment. Employees are entitled to paid vacations, off days and public holidays every year.

Work is restricted to a certain number of hours which must not be exceeded.

4. Standard Working Hours

In the UK, most companies are open from Monday through Friday from 9:00 to 17:00. The average UK worker put in 36.6 hours a week at work as of 2023. Under UK legislation, a worker's weekly maximum hours are limited to 48 hours. Emergency services is one of the occupations that is excluded, nevertheless.

5. Equal Opportunities

In the last twenty-five years, the UK has experienced a rise in migration which brings diversity to the workplace. As people with different cultures and origins work together, equality in opportunities and respect is cherished.

In the UK corporate environment, cultural sensitivity and understanding are crucial due to the country's diversified population.

6. Decision-making and Hierarchy

Decision-making in the business sector may take a longer process as it involves carrying out in-depth investigations, analyses and discussions before making decisions. The work system in the UK has an organogram that clearly states the role of each employee in the company while placing value on each role.

The above key points make cities in the UK conducive and healthy to work and establish new businesses.

Some Policies that govern the business culture in the United Kingdom include:

7. Financial Obligations

Anyone considering starting a business in the UK should be aware of these financial obligations such as corporate tax, Value Added Tax and other taxes that pose as national insurance tax.

After registering for HMRC when you've decided to start a business here in the UK, you have to register for VAT as well, then national insurance.

8. Intellectual Property and Trademarks

Intellectual property such as music, arts, designs and trademarks are protected in the UK. To ensure the protection of intellectual property rights, apply directly to the IPO yourself after seeking legal advice from experts.

9. Health and Safety Regulations

There is health and safety regulation that helps manage risk and provides employees with a safe working environment.

The Health and Safety at Work Act ensures that employers provide training for employees, make available safety and first aid equipment, and provide washing facilities at work.

10. Privacy Laws

In the UK, there's a data protection policy that safeguards important information and makes sure it is used properly and legally. It ensures that the use of personal data is used for specific and explicit purposes.

11. Consumers Regulation

Consumers in the UK are now legally entitled to return faulty or spoilt items purchased in-person or online and receive a complete refund within a stipulated time.

Trade Description Act also forbids the use of false or misleading descriptions of goods and services.

The Top 10 Cheapest Cities To Start A Business In The UK

As a small business owner, affordable commercial rents, lower tax rates, affordable labour costs and access to resources are influential factors in business sustainability. Average and lower pricing rates are usually available in cities with low cost of living. Here are the top ten cheapest cities to start a business in the UK:

1. Newcastle

Newcastle is the most energetic city in Northeastern England. It is well known for its extensive cultural offerings, warm ambience, and rich history. Newcastle is becoming known as a centre for innovation and entrepreneurship, making it a desirable and one of the cheapest cities to start a business in the UK.

  • Living expenses: In comparison to other cities, Newcastle has a remarkably low cost of living. It is easy for business owners to manage their finances because housing, transportation, and daily costs are all affordable.
  • Taxes on Businesses: Newcastle provides affordable business taxes to support new businesses and create space for expansion. Although it is inevitable for new enterprises to fail in their first few years, the modification of tax rates in some cities won't bankrupt the startup.

The UK government actively promotes a business-friendly atmosphere by offering grants and assistance programs to new businesses.

  • Commercial Rent: Commercial rents are affordable for businesses that need physical premises. Newcastle City has a range of office spaces, from contemporary coworking spaces to conventional office buildings, offering choices to accommodate various business requirements and price ranges.
  • Wages: Newcastle's average income is lower in comparison with larger cities, therefore wage expectations are acceptable. This can assist companies in effectively controlling labour expenses while luring in highly qualified workers. Many universities and colleges in the city guarantee a constant flow of skilled graduates ready to enter the industry.

2. Birmingham

Birmingham is the ideal location to start a business since it provides low startup expenses and a supportive, vibrant business environment. Birmingham, a city in the West Midlands noted for its vibrant industrial and cultural scene, has grown into a modern hub for industry and innovation.

  • Living expenses: Birmingham offers chances and innovation clusters at an affordable cost of living, which is very advantageous for businesses. Companies that can take advantage of opportunities and have modest expenditures will do better in the city.
  • Business Taxes: Birmingham's company sales tax rate is now 4%. Commercial space utilized for the care of the disabled, religious places of worship, and agricultural land and buildings may not require its occupants to pay business rates. Through funding, incentives, and company development programs, the government actively promotes entrepreneurship.
  • Commercial Rent: Real estate pricing is quite competitive and provides a range of possibilities, from sleek, contemporary office buildings to adaptable coworking spaces. Birmingham's prime rent is currently £41 per square foot, and recent projections indicate that top rent will rise to £42.50 by 2024.
  • Wages: In the UK, the average Birmingham wage is £35,089 annually, or £17.99 per hour.

3. Liverpool

Liverpool is a city in northwest England well-known for its rich history in music and pop culture legacy. Over the past few decades, Liverpool has flourished as a hub for business and innovation. It is a popular location for new firms because of its favourable location, affordable living costs, and supportive business environment.

  • Cost of living: The cost of living in Liverpool varies with your style and preference. However, a single person can survive on GBP1500 monthly including rent. Housing, utilities, and general expenses are more affordable to ease the financial burden on new business owners.
  • Commercial Rent: Commercial space rentals are highly competitive which afford new businesses good locations for business growth. A thriving business needs a good location to grow, while pricing might be an issue, a good location can make sufficient profits.
  • Business Taxes: Business tax rates may vary depending on the business structure and property rateable value with reliefs available. Standard multiplier (rateable value for £51,000 and above): 51.2p per pound. Small business (rateable value of less than £51,000): 49.9p.
  • Wages: Liverpool has more affordable average salaries than more expensive locations, therefore pay expectations are acceptable here. This affordability also applies to labour costs, which enables companies to control expenditures while incurring highly qualified personnel. The presence of prestigious institutions makes for the availability of skilled labourers. The wages may vary from £10 - £15 hourly.

4. Sheffield

Sheffield is known for its stunning environment which serves as a side attraction to tourists and visitors. With its history in steel production, it was nicknamed the moniker Steel City. Sheffield has since then developed into an institution of innovation and entrepreneurship, for new companies and business owners with its affordable prices.

  • Cost of living: The average total cost of living monthly in Sheffield is approximately £2000 excluding rent. The cost of living is quite moderate compared to London or larger cities in the UK.
  • Business tax rate: Business rates are paid based on the physical premises they occupy. The larger the business size, the higher the rate to be paid. This allows new businesses to grow their business before paying large sums of money for rent.
  • Commercial rent: When it comes to the cost of renting business premises, Sheffield is among the most affordable places to launch a company. Sheffield offers rental spaces at £200 per month for offices, £600 per month for garage and workshop spaces, and £675 per month for retail real estate.
  • Wages: The average annual salary of workers in Sheffield is £27,000 per annum.

5. Glasgow

Glasgow is a stunning city which is also referred to as the third most populous city in the UK. It is one of the cities leading in the fields of modern manufacturing and engineering.

Amazing places to visit in Glasgow include Glasgow Cathedral, Riverside Museum, Glasgow Museum of Modern Arts, and Kelvingrove Art Gallery and Museum.

  • Cost of living in Glasgow: Average monthly expenses consist of monthly rent, utility costs, local airport tickets, meals and internet. Average monthly expenses should be between £2,500-£2,800.
  • Business tax rate: The basic business rate is 49.8p while intermediate and higher properties are 54.5pa and 55.9 respectively.
  • Commercial Rent: Office space price - £420-£1,200 pa, Warehouse and industrial space price - £1,068-£1,683 pa, Retail space price  - £6,000 pa (£500 pcm).
  • Wages: The average annual salary in Glasgow is approximately £30,000.

6. Coventry

Coventry is the second largest city in central England which was left in ruins after the World War II bombing. It has a rich history, cultural attractions, and a blend of medieval and modern architecture.

  • Cost of living: Coventry has a lower cost of living than a lot of other UK cities, such as Birmingham and London. The cost of housing, utilities, and other necessities has decreased, which facilitates easier money management for business owners and their staff.
  • Business tax rate: The business rate multiplier in England is 51.2p for every pound of rateable value. The small business multiplier for properties rated at less than £51,000 is 49.9p.
  • Commercial Rent: Retail property - £1,250 per month. Office space Rent - £2,063 per month for 1,551 square feet.
  • Wages:Work labour wages annually range from £25,133 - £55,525 depending on the education and years of experience.

7. Belfast

Northern Ireland's capital city is Belfast. It gave birth to the RMS Titanic, the ship that famously collided with an iceberg and sunk in 1912. Belfast's tourism, cinema, and financial technology sectors have all made major contributions to the growth of the services sector.  

  • Cost of living: A single person's monthly expenses in Belfast are between £1,700 and £2,000. Belfast offers a moderate cost of living for both corporate and business organisations. Entrepreneurs can live comfortably while managing their business.
  • Business rate: The average increase in business rate tax for 2023-2024 was £38.83 per year for a house. In Belfast, businesses are liable to rate a support package of £50m.
  • Commercial Rent:

£2,958 per month for ground and second-floor offices;

£904 per month for office space;

£850 per month for a three-story commercial structure;

from £4,200 a year for office space on the High Street;

£219 per month for a serviced office

  • Wages: Belfast's average yearly wage is approximately £28,000, which is lower than the national average but yet reflects the high cost of living and challenging economic climate of the city.

8. Bradford

Bradford is renowned for its inexpensive business expenses and low cost of living. The city is affordable for businesses because it provides low fuel and fair prices for lodging and meals.

  • Cost of living: The cost of living is not very high. Singles in Bradford will spend between £800 and £1000 a month on average. The total includes housing costs, utilities, food, travel expenses, and other miscellaneous costs.
  • Business Tax Rate: In England, the typical multiplier for homes is 51.2p, while the multiplier for small businesses is 49.9p.
  • Commercial Rent:

Office space costs between £10 and £15 a square foot annually.

Warehouse spaces: year, from £4 to £8 per square foot

Business parks: annually, between £8 and £12 per square foot​

  • Wages: As of 2024, the average living wage in the UK is £11.95 per hour. This wage is greater than the national minimum wage and is voluntary for certain firms

9. Hull

Hull is one of the cheapest cities in the UK with its reasonably priced housing and business expenses. It serves as a welcoming atmosphere for new businesses at less-than-average prices for living and running an enterprise.​

  • Cost of Living: An average one-bedroom apartment in Hull is between £300-£400. Lifestyle is relatively cheap which is why Hull is among the cheapest cities to start a business in the UK. Startup founders can sustain their businesses for the first few years without incurring debts or huge expenses.
  • Business Rate: It is similar to other cities in the United Kingdom.
  • Commercial Rent: It may vary from £8 to £30 per square foot per year, depending on the area and types of space needed. To start a business in the cheapest cities in the UK, it is required to consider pricing and business tax for proper budgeting.

10. Cardiff

The capital of Wales, Cardiff, is a small city with reasonably low operating and housing prices. Its growing economy makes it a great place to start a business. When looking at the UK's most affordable cities, this is one that you should take into account.

  • Cost of living: Average monthly expenses should be between £1000 -£ 1,200 including rent. Cardiff is a good city to start a new life as an immigrant or new business owner to avoid being overwhelmed by expenses.
  • Business Rate: The business tax rate in the United Kingdom is uniform.
  • Commercial Rent: Commercial rent is determined by the type of business property, location and specific requirements of the business. Office space and business parks are relatively £10 - £25 per square foot per year.
  • Wages: The minimum living wage is £11.95 per hour in the UK as of 2024.

Conclusion

New business owners who are deliberating on what city to start a business in the UK should explore the top 10 cheapest cities stated in this article. Business location is one of the factors with great influence on the growth and expansion of the business. As an emerging business owner, it is advisable to cut costs as possible as you can and start a business in cities with relatively low costs of living. Lastly, contact our team before making a major decision on your startup or business.