You can base your entities in multiple locations across the globe.
It is beneficial if you are willing to move your registered company to another location but are not ready to give up an established business and a wide range of customer base or go through the trouble of forming a new company in another location.
Tax treatment of the UK Limited company trading overseas
- A UK-resident company's overseas branch is an expansion of the UK trade, therefore when you begin trading outside of the UK there will be numerous tax risks:
- Registered UK enterprises are liable to corporate tax of 19 % on all profits and chargeable gains from the UK and overseas.
- Overseas operations may result in a taxable presence in that country if you have a permanent location of the company or negotiate and conclude agreements in a foreign country where you live permanently. In such situations, your company will have to be registered with an overseas tax authority.
- Double tax relief is granted when profits from overseas operations are taxed both in the United Kingdom and abroad.
- Double tax relief is limited to the amount of UK tax on your overseas profits.
- Trading losses from offshore activities can be relived against UK profits.
- UK capital allowances are applicable for all plants and machines purchased overseas.
Tax treatment of non-UK resident investors and directors
If you live permanently outside the United Kingdom (183 days or more in a tax year) there will be personal tax implications for the income you receive through your company:
- You will still be employed in the UK as a company director because your company is registered in the United Kingdom.
- You will have to pay personal tax in the UK for income from any time you spend working in the United Kingdom.
- Your tax-free personal allowance of 11,850 (2018-19) should still be available.
- If you are needed to pay personal tax and national insurance in the United Kingdom, your business must remain registered for payment.
- National insurance contributions may have to be paid on UK income.
- Your country of permanent residence may tax you on your income from the United Kingdom, but you will be able to claim tax relief if that country has a' double taxation agreement' with the United Kingdom.
- The first 2,000 (2018-19) dividend income will be tax-free, apart from the 19 % corporate income tax that is deducted from the profits of the company before dividend income is distributed.
- If you are responsible for UK income tax, you will still have to report your dividend revenue on a self-assessment tax return. You're not going to be taxed on it but still has to report it.
Are you a UK resident or a non-UK resident?
Your UK residential status normally relies on how many days you spend in the UK during the tax year that operates the following year from April 6th to April 5th.
For UK residents:
- During the tax year, 183 days or more are spent in the UK.
- Only home is in the UK you have to own, rent or live in that property for a total of at least 91 days and you spend at least 30 days in the tax year there.
For Non-UK residents:
- Less than 16 days spent in the United Kingdom, or 46 days if for the past three tax years you have not been classified as a UK resident.
- Work full-time overseas (average of at least 35 hours/week) and spend less than 91 days in the United Kingdom, of which less than 31 days are working days.
When you first move overseas, you will be subject to a split-year therapy one part of the tax year will be' non-resident' and that the other part will be' resident.' You will be responsible for UK foreign income tax based on the time you lived in the United Kingdom during the tax year. This will be automatically applied through PAYE or even when you submit your self-assessment tax return.
Shifting your registered company to a different part of the UK
You can base a few or all of your operations in a different part of the UK easily because your company profits and personal income will continue to tax under the same UK tax regime. For example, if you have your registered company in England and Wales, and you are willing to move it to England and Wales, you can move your business operations with you. Your company will still be registered in England and Wales and you can continue to trade there. You will receive all your statutory mail to your registered office in England or Wales, and all legal matters relating to your business will be dealt with by the courts in England and Wales, and your company will still be taxed in the same way.
Should you set up your business to a new address?
You should set up your business in every part of the UK, you move to. This will allow making a relevant geographical presence, establish relationships with new clients and contacts, and offer a desirable address for accepting returns, invoices, and other essential correspondence.
If your existing business in other parts of the UK is well established, you should keep your existing business addresses for mailing purposes. In this way, you can provide security and professional continuity to existing clients and contact them to build up strong relationships. Thus you will not lose your existing customers.
This is an efficient and affordable way to maintain stability if you are willing to move. You just have to ensure that you can get your mail forwarded from your existing business address to the new address.
Why can't you move to your registered office?
CompaniesHouse incorporates limited companies in three distinct jurisdictions in the UK. England and Wales are one jurisdiction because the same court deals with the litigation. Both Scotland and Northern Ireland have distinct legal systems and jurisdictions. The jurisdiction in which you choose to register your business will dictate your registered office's place:
- Companies registered in England and Wales should have a registered office in England or Wales.
- Companies registered in Scotland should have a registered office in Scotland.
- Companies registered in Northern Ireland should have a registered office in Northern Ireland.
Your trading operations will not be affected by the location of your registered office.
Registered office rules apply to all sized registered businesses and multinational companies with branches all over the world. If you decide to trade in different parts of the UK or abroad, you can simply set up a business address wherever you would like to be contacted by customers and other third parties.
How to change an English and Welsh company to a Welsh company and vice versa?
A registered company in England and Wales must have its registered office address in either country and it can switch the position of its registered office from one to the other whenever it wishes. It's because England and Wales are regulated by a single legal system.
An English and Welsh Company can also be transformed into a Welsh-only Company, as long as its registered office is located in Wales. Similarly, a registered company in Wales-only can be changed to the one registered company in England and Wales instead.
The following measures are essential to create either of these changes: A special resolution approving the change must be passed by the shareholders.
- Form AD05 must be completed by the Director:' Notice to alter the situation of an English and Wales business or a Wales corporation.'
- A copy of the resolution and form AD05 must be provided to the House of Companies within 15 days of passing.
- If you also need to change your registered office situation, the director will have to complete AD01 'Change registered office address' form and deliver it to Companies House simultaneously.