We’ve all thought about it, haven’t we? A new life in the sun! Numerous studies show that the sunshine makes us better, more productive workers thanks to its ability to positively impact our health - both psychologically and physiologically. 
With the potential to restore our life work balance, the chance to experience more outdoor adventures with the family, heading to the beach for a lunchtime swim and weekends exploring the local produce markets, it’s no surprise that over 300,000 Brits leave the UK to live abroad each year, with an estimated 5.5 million - around one in 10 of UK nationals - British people living abroad on a permanent basis
 
For those of us with our own businesses, it may be even easier to lay roots overseas - but what does the reality of moving abroad look like when it comes to your limited company and paying taxes? 

Things to Consider 

You can indeed base your business operations from any country you like, within the UK or elsewhere in the world, and continue trading through your UK limited company. 
 
This is in fact how most large corporations operate anyway, including international hotels, offices, retailers and factories - amongst many other types of business. 
 
Since you can avoid going through the rigmarole of incorporating a new company, and you’ll retain your business credentials and established client base, continuing to operate via your UK limited company is likely the easiest option when it comes to taking your business - and your life - overseas. 

Before you leave 

By all means, start packing your bags and dreaming of life by the beach - but before you head off, there is some essential admin you’ll have to do for HMRC if you’re planning to move abroad permanently, or for at least one full tax year i.e. 6 April until 5 April. 
 
For the self-employed, you’ll need to send your self-assessment tax return to HMRC with the SA109 section (‘residence’) amended to reflect your new overseas address. If you’re a client of Effective Accounting, we can help you with this. All you need to do is contact your account manager and they’ll arrange a time to speak with you to organise everything. 
 
For those who are employed, you’ll still need to inform HMRC that you’re moving abroad, but you need to fill in the P85 form instead. You’ll also need to ask your employer for parts 2 and 3 of your P45. 
 
It’s important to note that you are automatically classed as a non-UK resident if you work full-time (i.e. an average of at least 35 hours a week) abroad, and spend less than 91 days per tax year in the UK, of which less than 31 days are spent working. 
 
Again, if you’re a client of Effective Accounting, we can help you with this. Just contact your account manager and they’ll be able to help. 
 
You may be able to retain your UK residency status if 1) you have spent more than 183 days in the UK within a tax year, and 2) your only home is in the UK and it was available to use for at least 91 days in total, and you spent a minimum of 30 days in your home in the UK in the tax year, and 3) you worked full-time in the UK for any period of 365 days and at least one of these days fell into the specific tax year. 
 
To check whether you were counted as a UK resident for any of the tax years since 2016, use this simple online tool

What changes are there to paying your taxes when you live abroad? 

For owners of UK limited companies trading abroad, there are a number of taxes that must be paid: 
 
First of all, you will need to register with the relevant tax authority for your new country; you can do this by visiting your new country’s official government website 
There may be taxes to pay to the government of the new country you live in if you have a fixed place of business there; you can find out what this is by visiting your new country’s official government website 
You will still need to pay UK corporation tax which is currently 19% (this is being replaced by variable rates between 19-25% from 1 April 2023) for all chargeable gains and profits from abroad and from the UK 
You may be able to claim Double Taxation Relief when taxes are being paid on business activities in the UK and abroad (please note that the amount you can claim is restricted by the amount of UK tax you pay on your overseas profits) 
Any losses made from trading activities overseas can be relieved against your UK profits 
UK Capital Allowances are an option with respect to any plant and machinery purchases made abroad 
You may need to continue paying National Insurance contributions if you plan to return to the UK or claim a state pension when you retire 
 
If you’re a non-resident, company director and shareholder of a UK company, which is what you will become if you move abroad permanently, you will need to pay tax on any income you get from your UK registered limited company. This is because you will still be legally employed by a UK-based company. 
 
The taxes you’ll need to pay are as follows: 
 
Personal tax payable on any income you receive from working in the UK, e.g. if you return to attend a board meeting 
Your tax-free Personal Allowance (currently £12,570) should still apply 
National Insurance contributions on UK income 
If you’re required to pay the above taxes, your company will need to remain registered for PAYE 
If your new country of residence requires you to pay tax there as well as in the UK, you can claim Double Taxation Relief, but only if there is an agreement in place between your new country of residence and the UK 
19% UK Corporation Tax is to be paid on company profits before any dividends are paid out (this is being replaced by variable rates between 19-25% from 1 April 2023) 
 
If you continue to be liable for Income Tax in the UK, you must continue to report any dividend income via a Self Assessment form 
If you’re uncertain on any aspect of moving your company abroad, do feel free to contact us and we’ll help you through the complex issues around paying the correct taxes and staying compliant. 
 
Written by: 
Nicola J Sorrell - Effective Accounting 
Founder | Xero Champion | IR35 Expert 
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