Your limited company and all it’s registered offices will always remain in the UK.
Dissolving your company is the only way you can legitimately relocate your company outside the UK. In this case, the country where yo wish to relocate to must have your company registered in all it relevant records.
An alternative will be to use the name of the existing company to open register a company in another company. This is legal because both companies are part of the same group. It will only take time and money, but it is achievable.
However, it is good to know that neither of these is required for you to continue trading with your existing UK firm outside the UK because the operations of your company can be done wherever you like. As a matter of fact, at any location in the world, a company based in the UK can transact its business.
This occurs more often with larger organizations with branch offices, hotels and shops in different countries. This is of high benefit to those company owners who wish to relocate but do not want to lose close down an established business with high client base. It is also useful for people who do not wish to restart the rigours of establishing a new firm and growing it.
Tax treatment of UK company trading overseas
If your firm starts doing business outside the UK, there will be tax implications.
In reality, any office of an organization with its initial or head office in the UK will be regarded as an extension of UK trade. This implies that there will be some tax implications for your business:
- Every firm registered in the UK is mandated to pay 20% corporation tax on every gains and profits generated in the UK and beyond.
- Trade activities outside the UK can result in taxable presence in said place if you posses a permanent business facility there or you are concluding contracts at the moment in a country where you reside permanently. If this is the case, you have to register your firm with the appropriate authorities in said country.
- When profits are taxed both overseas and in the UK, double taxation relief is offered.
- This relief however, is dependent on the amount of UK tax on your profits made outside the UK.
- Losses made on trade outside the UK could be relieved against the profits made in the UK.
- As regards plants and machinery bought outside the UK, the UK capital allowances are made available.
Tax treatment of non-UK resident directors and shareholders
There will be tax implications for income received from your company if you spend 183 days or more in a tax year outside the UK:
- If you are a director, you will still be employed because the company is still a UK registered company.
- A personal tax will have to be paid for every income received from while working in the UK, even if it is just a board meeting; but, the tax free personal allowance of £10,600 (2015-16) is still accessible by you.
- Your firm will still have to be registered for PAYE if you are still obliged to pay National Insurance and personal tax in the UK.
- On every income received from the UK, you may still be required to pay National Insurance Contributions.
- If your country of permanent residence has a â€˜double taxation agreement` with the UK, you will be able to claim tax relief on your income received from the UK.
- Asides the notional 10% tax credit, you will not be required to pay any further tax on dividends receives on shares in a UK company as a permanent non-resident. This is as a result of the fact that the company would have already paid the corporation tax on the money. Under normal circumstances, the money you can receive and keep is the net sum of the issued dividend sum.
- If you are liable for income tax in the UK, a self assessment tax return will still be required of you to be filed stating your dividend income. You have to report it even though you won`t be taxed on it.
Am I a UK resident or non-UK resident?
The amount of time you spend in the UK during a tax year will determine if you will be liable for UK tax on foreign income.
The amount of time spent within the UK during a tax year (6th â€“ 5th April) determines your status as a UK resident.
- Automatically UK resident:
If you spend 183 days or more in the UK within the tax year.
Your only home is located in the UK â€“ you are required to have lived in a your own or rented apartment in the UK for at least 91 days. It is also required of you to spend at least 30 days there within the tax year.
- Automatically non-resident:
If you stay in the UK for a period shorter than 16 days; however, if you have not be classified as a resident of the UK in the last 3 years, you will not be classified as a resident if you spend less than 46 days on your current stay.
If your full time work is outside the UK (minimum of 35 hours/week) a period shorter than 92 days is spent in the UK an out of which not up to 31 days are spent working.
At you initial travel outside the UK, a split-year treatment will be adopted for you. The first will be non-resident while the second will be resident. Based on the time you spent in the UK during the tax year, the UK tax on foreign income is what you will be liable for. This will directly be applied via PAYE when your Self-Assessment tax return is filed.