In an era defined by global mobility, people are increasingly finding themselves engaged in professional pursuits that transcend international borders. In this dynamic landscape, questions of tax implications and regulatory compliance become paramount. This blog addresses the queries of a non-UK resident client, shedding light on the nuances of operating private UK limited companies, continuing employment and receiving dividend income.
Operating UK limited companies as a non-UK resident
In this blog, we will examine the case of a client who is a non-UK resident director of private UK limited companies and is seeking to continue his operations from abroad. Importantly, from a UK tax perspective, there is no inherent impediment to a non-UK resident director managing UK limited companies remotely. However, the client is advised to seek specialist advice to evaluate potential tax implications in their country of residence.
Employment by UK limited companies as a non-UK resident
Tax on UK earnings
The tax treatment of the individual’s earnings hinges on their non-UK residence status under the Statutory Residence Test (SRT). Earnings related to duties performed in the UK incur taxation and applying for a No Tax (NT) PAYE code from HMRC may be necessary if no UK duties are anticipated. This is due to the absence of earnings falling under the purview of the PAYE regulations.
Application for direction under s 690 ITEPA 2003
In scenarios where the individual is required to perform certain employment duties in the UK, an application to HMRC for a direction under s 690, ITEPA 2003 could be a prudent step. This enables the employer to withhold PAYE taxes based on the estimated percentage of earnings tied to the individual’s expected UK duties.
Recognising and adhering to international tax, social security, payroll and employment law obligations in the director’s country of residence is imperative and requires professional guidance.
Receiving dividend income as a non-UK resident
Year of full non-UK residence
In a full year of non-UK residence, dividend income can be treated as ‘disregarded income.’ This unique status limits any UK tax liability to specific criteria outlined by HMRC, with a non-repayable tax credit accompanying dividend payments.
Tax credits and double taxation agreements
Understanding the tax credit attached to dividend payments and navigating the landscape of double taxation agreements is crucial. Anti-avoidance rules may apply to long-term UK residents transitioning to non-UK residency so ensure you get expert advice. AF Tax Solutions can help you with this complex tax situation.
Navigating the intricate web of regulations associated with operating UK companies, employment and receiving dividends as a non-UK resident demands a nuanced understanding of both UK and international tax frameworks. If you find yourself in this situation you should seek specialist advice to ensure you are tax compliant and optimising your financial strategies in the evolving terrain of global business dynamics. As borders blur, the ability to navigate and leverage these complexities becomes a key determinant of success in the international professional landscape.
Why choose us?
AF Tax Solutions Limited provides expert guidance to people who are non-UK residents and have relocated overseas to work. Over the years, we have helped several people in your situation who have moved to Dubai and other parts of the world for a variety of reasons, which means that we can offer tailored non-UK resident tax advice for your unique non-UK resident situation.
We know how complicated tax planning can be when your residency status changes but you still earn money from UK companies or dividends. Our expert team is here to guide you through every step, ensuring that should you decide to change your residency status, you can do it with confidence and the support of an experienced team of accountants and tax planners.
We can help you navigate the complexities often associated with moving abroad to places like Dubai and can provide essential assistance and expertise to guide you effortlessly through this process.
Our comprehensive range of accountancy services includes advice that ensures that you meet all the legal and tax compliance requirements.
Reach out to our experienced team today and take the first step toward a bright and affluent future in your new country of residence, free of tax compliance worries.
Call our friendly team today to ensure your residency status doesn’t affect your peace of mind.