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Where Taxpayers and Advisers Meet

Tax for Non UK Resident Director

kasparov
Posts: 1
Joined: Mon Nov 17, 2014 10:28 am

Tax for Non UK Resident Director

Postby kasparov » Mon Nov 17, 2014 11:52 am

Hi – I’m hoping someone can assist me.

If you are a non UK resident and a director of a UK Ltd company, where the director is also the sole employee and works outside UK, what would be the most tax efficient way to withdraw the corporation profit?

My understanding is that to avoid overpaying tax in the UK as a UK non-resident that I pay myself as an employee a bonus equivalent to all my corporation profit for the year. With this set up I avoid paying any corporation tax and I pay no income tax as a UK non-resident employee, however I must pay National Insurance (NI) contribution as an employer (13.8% of the full salary) and pay full NI as an employee for the first 52 weeks from registering as UK non-resident. Is this correct? Is it correct that in the 2nd year I will not have to pay any tax (Employer NI can be reclaimed I believe?)? Note that all taxes in the country I work abroad are paid (UK doesn't have double taxation treaty in country I work though).

Note also I intend to be in the UK well below 90 days this tax year but have yet to submit the P85 form (for “Leaving the UK”). I have also not withdrawn any dividends this tax year – is it advisable to wait until next tax year to pay myself a salary?

My clients has to pay into a company account but it could be a non-UK based Limited Company for work overseas. I have not given much thought to opening a company abroad but would this be the best option from a tax perspective?

Are there any good specialists in these expat tax affairs who could assist me further?

dingobingo
Posts: 2
Joined: Tue Nov 18, 2014 10:13 am

Re: Tax for Non UK Resident Director

Postby dingobingo » Tue Nov 18, 2014 12:31 pm

I'm interested in responses to this too.

I recently opened a UAE FZE company to receive non UK derived business fees. Initial outlay of £5k to setup but should recoup that within 12 months through saved tax (corp and income).

I still have a UK company for UK clients though hence my interest in responses.

LozaACCS
Posts: 1504
Joined: Wed Aug 06, 2008 3:55 pm

Re: Tax for Non UK Resident Director

Postby LozaACCS » Tue Nov 18, 2014 8:50 pm

Much more detail would be required, particularly in respect of where the trade is carried out and whether all of your duties are carried out abroad.
If the company has any trade in the UK it would be difficult to argue that your duties (being the only employee) are performed wholly overseas which you would need to do to escape UK IT.

GlobalTaxAdviser
Posts: 633
Joined: Fri Dec 05, 2014 1:18 am

Re: Tax for Non UK Resident Director

Postby GlobalTaxAdviser » Sat Dec 06, 2014 7:13 pm

I'm interested in responses to this too.

I recently opened a UAE FZE company to receive non UK derived business fees. Initial outlay of £5k to setup but should recoup that within 12 months through saved tax (corp and income).

I still have a UK company for UK clients though hence my interest in responses.
If you managing the operation through the UK than any profits from the overseas company will become liable in the UK

Secondly, UK does have Controlled Foreign Company legislation which applies where the headline tax rate of more than 75% of the UK Corporation tax

GlobalTaxAdviser
Posts: 633
Joined: Fri Dec 05, 2014 1:18 am

Re: Tax for Non UK Resident Director

Postby GlobalTaxAdviser » Sat Dec 06, 2014 7:21 pm

Hi – I’m hoping someone can assist me.

If you are a non UK resident and a director of a UK Ltd company, where the director is also the sole employee and works outside UK, what would be the most tax efficient way to withdraw the corporation profit?

My understanding is that to avoid overpaying tax in the UK as a UK non-resident that I pay myself as an employee a bonus equivalent to all my corporation profit for the year. With this set up I avoid paying any corporation tax and I pay no income tax as a UK non-resident employee, however I must pay National Insurance (NI) contribution as an employer (13.8% of the full salary) and pay full NI as an employee for the first 52 weeks from registering as UK non-resident. Is this correct? Is it correct that in the 2nd year I will not have to pay any tax (Employer NI can be reclaimed I believe?)? Note that all taxes in the country I work abroad are paid (UK doesn't have double taxation treaty in country I work though).

Note also I intend to be in the UK well below 90 days this tax year but have yet to submit the P85 form (for “Leaving the UK”). I have also not withdrawn any dividends this tax year – is it advisable to wait until next tax year to pay myself a salary?

My clients has to pay into a company account but it could be a non-UK based Limited Company for work overseas. I have not given much thought to opening a company abroad but would this be the best option from a tax perspective?

Are there any good specialists in these expat tax affairs who could assist me further?
Yes you can get a NT code and pay yourself a salary and bonus to reduce Corporation Tax Rate to zero, However, the income should be declared in your country if residence. NI works differently and yes you can avoid NI for 52 weeks if you meet the conditions.

There maybe statutory residency rules to consider if you are personally liable to tax if you visit the UK regularly.

You maybe liable for Corporation Tax overseas if you have a permanent establishment in another country where you do business. A foreign company may give scope to reduce taxes. There maybe other non tax reasons why a company overseas could benefit the business.

Your company affairs seem little complex and suggest professional advice is sought

bd6759
Posts: 3109
Joined: Sat Feb 01, 2014 3:26 pm

Re: Tax for Non UK Resident Director

Postby bd6759 » Sun Dec 07, 2014 9:22 am

Yes you can get a NT code and pay yourself a salary and bonus to reduce Corporation Tax Rate to zero, However, the income should be declared in your country if residence. NI works differently and yes you can avoid NI for 52 weeks if you meet the conditions
I would suggest that getting an NT tax code and avoiding NI for 52 weeks are mutually exclusive. You must be gainfully employed in the UK to be liable to NI (you must be liable in order to get the 52 week exemption) and must be employed wholly outside the UK to get code NT.

You cannot give any definitive answer on the information given.


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