...

HOME

Relocating to Britain While Running an Overseas Business

Tax Accountant is a network of experienced professionals and proactive accountants. We offer a wide range of accounting and tax services; Contact us today to discuss your requirements

Ya Allah keep me safe and increase my susbsitance

Get Professional Help for Your Business

An increasing number of entrepreneurs and business owners are choosing to move to the UK while still maintaining control and ownership of a company based outside the UK. This remote working trend enables you to enjoy the benefits of living in the UK whilst continuing to operate your overseas business.

However, controlling a non-UK company whilst becoming a tax resident in the UK can affect your tax status. You must consider visa and registration requirements when relocating to the UK in the long term. 

Establishing UK Tax Residency

One of the first things to understand is the UK tax residency criteria. This refers to the circumstances under which you become liable to pay UK income tax on your worldwide earnings.

Some of the factors that indicate UK tax residency include:

  • Spending 183 days or more in the UK within a tax year
  • Having a home in the UK that is available to live in for a continuous period of at least 91 days and you use it for at least 15 days.
  • Carrying out full-time work in the UK

If you plan to live in the UK long-term and meet any of the above criteria, you will likely become a UK tax resident. As a UK tax resident controlling an overseas company, you may need to pay UK income tax and NI contributions on any income or dividends you extract from the company.

There are some alternative tests to determine UK tax residency, such as the “Sufficient Ties” and “Leaving the UK to Escape Tax” tests. These can override the statutory residence test in some circumstances. It’s important to take specific tax advice to confirm your position.

Implications for Your Overseas Company

Becoming a UK tax resident does not automatically make your overseas company a taxable presence in the UK. This depends on whether the company has a “UK permanent establishment”.

Some of the factors that could create a UK permanent establishment include:

  • Using a UK address as the company’s registered office
  • Holding company board meetings in the UK
  • Storing a significant amount of company assets in the UK
  • Having a UK-based employee of the company who has authority to enter into contracts

So if your overseas company avoids these factors, it should not be considered to have a UK permanent establishment. As a result, it remains treated as a non-UK company for corporation tax purposes. The company will continue paying corporation tax on its profits in its country of tax residence.

One exception is if you transfer ownership of your company to a UK-incorporated entity. This would make it a UK tax resident subject to UK corporation tax.

UK Visa Options

When moving to the UK long-term whilst running an overseas business, you must consider which visa route is most appropriate for your circumstances. Each visa type has specific eligibility criteria, such as investment thresholds, English language requirements and maintenance funds. It’s important to take advice from an immigration lawyer to identify the best visa route for you. 

One alternative is spending time in the UK as a visitor, which permits stays up to 6 months. But you must refrain from working or running a business whilst on a Standard Visitor Visa.

Tax Filing & Payment Obligations

Once a tax resident in the UK, you will have some additional tax reporting and payment responsibilities to be aware of. You may need to complete a Self Assessment tax return that reports your worldwide income, gains and capital ownership. If your overseas company pays you dividends or salary, this would likely need to be declared as foreign income on your UK tax return. There could be exemptions or relief available if tax was already paid abroad. It is also possible to elect for the remittance basis if you limit how much income you bring to/use in the UK.

Tax Planning 

The two factors that have a major impact on tax planning must be considered.

Double Taxation Agreements (DTAs): The UK has signed DTAs with numerous countries to prevent individuals from being taxed twice on the same income. These agreements provide relief by allowing individuals to claim tax credits or exemptions for taxes paid in their home country. Individuals managing non-UK companies must familiarize themselves with the specific DTA between the UK and their home country to ensure compliance and minimize tax liabilities.

Tax Planning Strategies: Effective tax planning can help individuals managing non-UK companies optimize their tax position. This may involve structuring the company tax-efficiently, taking advantage of available tax reliefs and incentives, and ensuring compliance with relevant tax regulations. 

With the right advice, you can successfully relocate to live in the UK despite controlling or owning an overseas business. Just plan the move carefully and remain compliant with ongoing obligations. The key is accepting and adapting to additional bureaucracies – around visas, international payments/investment flows and cross-border tax filings. 

Disclaimer

Our blogs and articles are for information only. If you need help with your specific tax problem or need advice for your business please call us on 0800 135 7323