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Setting up and operating a UK-limited company is possible even if you reside overseas. However, there are important legal and tax considerations when doing so.
Registration Requirements
To start a UK company as a non-resident, you must first register with Companies House. They are responsible for incorporating and dissolving limited companies in the UK. Companies House also examines and stores company information, making it publicly available.
Once your company is registered, you must appoint directors. Directors can provide an overseas service address on record, where any statutory mail and legal correspondence will be sent.
Notifying Tax Authorities If Relocating
If you already run a UK-registered company and decide to move abroad, you must inform Companies House and update the service address(es) for the director(s).
You should also notify HMRC of your non-UK tax residency status using form P85. And if you are self-employed, send an updated self-assessment tax return. These notify authorities that you and potentially your company are no longer UK tax residents.
Determining Tax Residency
When relocating abroad, determining your tax residency status is essential for personal and company taxes. As an individual, you may still be considered a UK tax resident if you meet certain criteria, like spending a minimum number of days in the country. The rules are complex, so seek expert guidance when making this determination.
For companies, a business incorporated in the UK is deemed a UK tax resident. The location of company management and control may also influence residency status when moving abroad. Your company's situation should be evaluated as well.
Tax Filing Obligations
Despite being overseas, non-resident directors may still need to complete Self-Assessment tax return under certain situations, such as:
- Having any workdays in the UK
- Receiving director's fees or expenses
- Earning other UK-based income
So, while your personal tax residency changes, you can still owe taxes on UK income. Always check with HMRC and tax experts on your ongoing filing duties.
Employment Taxes
Directors' remuneration charged to UK companies may still incur UK income tax and National Insurance contributions, even when paid to non-residents.
Whether UK payroll taxes apply depends on whether the director's duties were performed in the UK, the country's tax treaties, and where the director pays social taxes. Each situation should be reviewed to see what employment taxes are owed.
Creating a Permanent Establishment
When moving abroad, examine whether your company's activities in the new country constitute a permanent establishment there. This may happen through trading actively via a fixed local address.
If a permanent establishment exists, your company may need to comply with additional tax laws related to having a place of business in that country.
Relocating the Company
Once registered in the UK, you cannot officially move or change a company's jurisdiction of incorporation. The only option is to dissolve the existing company and set up a new overseas entity to transfer relevant assets.
However, establishing a non-UK company has major tax and operational implications to consider as well. Specialist advice is needed before taking this step.
Avoiding Double Taxation
One risk when moving abroad is that your UK business income gets taxed both domestically and overseas. To prevent double taxation, the UK has tax treaties with many countries that dictate which country can tax specific income.
However, treaties do not offer blanket exemptions from UK taxes. Always consult your accountant or tax attorney when evaluating your situation. With proper planning, double taxation scenarios can often be minimized or avoided.
Physically relocating yourself or your active UK company abroad involves navigating complex tax, employment, and legal issues. Each situation has its unique factors at play. To avoid expensive mistakes or non-compliance, get advice from qualified tax consultant before undertaking major moves overseas. With proper guidance, you can successfully run a UK company from abroad while meeting all ongoing domestic obligations.
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