In this short guide, Rapid Formations’ company formation experts cover four main considerations for running a UK business from abroad. They also answer common questions non-resident directors often have, such as how to stay compliant.
Whether you’re starting out or already running a UK limited company, moving abroad is an exciting opportunity. With a rise in hybrid and remote working, living in another country while managing your UK business is now entirely within reach.
Can I be a director and run my UK business from abroad?
Good news: you can run your UK business from outside the UK – be it in Spain, Dubai or beyond. However, as a UK company director living overseas, you must still adhere to these rules:
- Pay corporation tax on all company profits
- File annual confirmation statements to Companies House, plus annual accounts at the end of the financial year
- Submit your company tax return to HMRC every 12 months
You’ll also need to submit a Self Assessment tax return if you receive any income other than a director’s salary.
What’s more, you’ll need to meet obligations, such as having a registered office address in the UK, opening a business bank account in your country of residence, and understanding which taxes to pay.
If you’re living abroad and want to set up a UK business, registering a limited company is relatively straightforward with the support of a UK company formation agent. Rapid Formations offers non-residents packages suitable for non-UK residents from most countries. These include essentials, such as a London registered office address and business bank account referrals.
Step 1: Provide a registered office address
You’ll need a registered office address and appropriate email address to set up a UK limited company. The registered office must be a physical address in the UK and meet all regulatory requirements. Failure to comply could result in your company being removed from the Companies House register. While the registered office address is publicly available, your email address won’t appear on the public register.
Step 2: Open a business bank account
Having a business bank account in the UK isn’t a legal requirement – you can open one in your country of residence. However, many non-UK resident directors prefer to have one in the UK, as it helps with managing your UK company’s finances. To do so, you can:
- Open an account with a UK bank offering account services to non-UK residents
- Legalise your company documents for use in your home country
The choice is yours, but a company formation agent can help simplify the process. For example, Rapid Formations partners with Wise (formerly TransferWise) to provide Wise Business Accounts, offering access to account details in over nine currencies and more.
Step 3: Understand the business taxes you need to pay
Thinking about running a UK business from abroad? Knowing which taxes to pay is crucial and can be complex even for UK-resident directors.
For business tax, you’ll pay the same corporation tax rate on all profits and chargeable gains from the UK and abroad, regardless of where you live.
Your UK tax residency status determines what you pay for personal tax. Your UK residential status usually depends on the number of days spent in the UK during the tax year (6th April in one year to 5th April the following year). For sole traders, there’s no difference between you and your UK business. You’ll need to file a Self Assessment tax return, with your residency determining if you’re taxed on UK income only or worldwide income.
This can have significant implications, so we strongly recommend consulting an accountant with experience in non-UK resident tax matters.
Personal tax implications for UK residents
You will only be classed as a UK resident if you meet at least one of the automatic UK tests:
- You spend 183 days or more in the UK during the tax year
- Your only home is in the UK, and you spend at least 30 days there in the tax year
- You work in the UK full-time for any 365-day period
Alternatively, you meet the sufficient ties test, or you don’t meet any of the automatic overseas tests.
For all above cases, you must pay income tax on your worldwide income.
Personal tax implications for non-UK residents
If you spend fewer than 183 days in the UK during a tax year, you’re considered a non-resident and only pay tax on income from inside the UK.
Non-resident directors (NRDs) living abroad for 183 days or more in a tax year must pay personal tax on any UK earnings – even for minimal visits, such as one meeting. Your country of residence may also tax your UK income, but you could claim tax relief if it has a ‘double taxation agreement’ with the UK.
NRDs don’t pay UK tax on dividend income unless ‘split-year treatment’ applies. However, UK corporation tax is deducted from company profits before dividends are distributed. Dividend income must still be reported on a Self Assessment tax return if required, and National Insurance contributions may apply to UK income.
Step 4: Consider expenses when travelling to the UK
Before setting up or running a UK business from abroad, factor in travel costs to the UK. Seek specialist advice regarding on whether travel and accommodation expenses are taxable or exempt. NRDs travelling to the UK for business must report any business travel and associated income to avoid financial or reputational risks.
Remember, using a registered office address service can also help you avoid business trips needed for administrative reasons, such as collecting your company post.
Non-resident directors: FAQ
Setting up a UK business from abroad or running it overseas is exciting but may be daunting at first. To help ease the process, take a look at the answers to some of the most common questions non-resident directors ask.
Does FSCS cover non-UK residents?
The Financial Services Compensation Scheme protects customers by paying compensation when financial services firms fail. It covers non-UK residents and will protect up to £85,000 in total across all accounts you hold. This means you can manage your UK business abroad and rest assured that you won’t lose all your savings if your bank or building society goes bust. However, for it to apply, the bank or building society must be UK-authorised.
How to stay compliant when operating a UK company from overseas
HMRC can easily identify compliance risks for NRDs by reviewing short-term business visitors and cross-referencing Companies House data with PAYE Real Time Information (RTI) submissions, which include information sent to HMRC about NICs, income tax and more.
Although compliance can be more challenging for NRDs, failing to meet UK obligations or operate PAYE or NIC where needed can result in financial penalties and reputational damage.
Fortunately, detailed guidance is available from the experts at Rapid Formations.
How to liquidate a UK limited company
You can liquidate or ‘wind up’ your UK business from overseas. Your company will stop doing business and employing people, and it will be removed from the companies register at Companies House.
The rules are the same for all UK company directors: comply with UK insolvency legislation and seek advice from a licensed insolvency practitioner.
Thankfully, you can make phone calls, send documents electronically, and have virtual meetings with your licensed insolvency practitioner to avoid travelling to the UK.
Successfully run your UK business from abroad
Moving abroad is an exciting prospect, but preparation is key. Before you embark on this new chapter, ensure you have a UK registered office address, a suitable business bank account, and a solid understanding of your tax obligations. Plenty of resources are available to guide you, including expert advice from company formation agents.
Reach out to the leading team of experts at Rapid Formations and see how it’s easier than ever to run your UK business from abroad.
