An increasing number of business owners I speak to are moving overseas while continuing to run their UK companies. Some are relocating for family reasons, others for a change in lifestyle, and many simply want the flexibility to work from somewhere else.
One question that comes up regularly is whether they can continue to own and manage a UK company while living abroad. The answer is yes. There is nothing preventing you from remaining a director or shareholder of a UK company simply because you no longer live in the UK.
However, moving abroad does change how your income and gains are taxed, and there are some important considerations for the company itself.
The first year is particularly important, as decisions made around your departure can affect your tax position for several years afterwards.
Here are five areas I recommend reviewing before and during your first year overseas.
1. Establish when you become non-resident
Your UK residence status is determined by the Statutory Residence Test (SRT), which establishes how the UK can tax your income and gains.
For business owners who continue working after moving overseas, the most common route into non-residence is the full-time work abroad test.
To qualify, you must meet the following criteria during a tax year period from 6 April to 5 April:
- Working at least 35 hours overseas per week;
- Exercising a workday overseas every 31 days;
- Being present in the UK at midnight on no more than 90 days;
- Exercising no more than 30 workdays in the UK.
If you leave the UK within a tax year period, you can split a tax year into a resident part and a non-resident part providing that you satisfy split year criteria. You can do this by starting to meet the full-time work abroad criteria at some point during the tax year. The midnight and workday thresholds are tapered depending on when you begin to satisfy the criteria. See HMRC manual RFIG21070.
My tip: keep a diary of your travel pattern and work pattern from the day you leave the UK so you can accurately assess your resident status at the end of the tax year.
2. Review how your salary will be taxed
Once you’re non-resident, HMRCs right to tax you are limited to UK sourced incomes and UK property gains.
The source of employment income is where you physically exercise the workday. As such, workdays exercised in the UK are taxable and workdays exercised overseas are not taxable. See s27 ITEPA 2003.
In a simple example, if you earn £100,000 and work 10% in the UK and 90% overseas, HMRC can only tax 10% or £10,000.
3. Get your dividend timing right
This is the big one for most owners, and there are 3 things to know.
The good news first. Once you’re non-resident for a full tax year, UK dividends are categorised as disregarded income and tax on disregarded income is limited to tax withheld at source, which for dividends, is nil. See HMRC manual HS300.
Next, the year you leave. You’re not eligible to categorise dividend income as disregarded income in the year you leave as you will be split year resident and thus, dividend extractions will be subject to normal tax rates.
Finally, the 5-year rule. If you return to the UK within 5 years, dividends extracted from your close company become taxable in the tax year you return to the UK.
In a simple example, if you leave the UK in 2026/27, take a £100,000 dividend in 2027/28 and return to the UK in 2028/29, the £100,000 dividend will be taxed in the 2028/29 tax year.
For dividend income to be tax free in real time and tax free forever from a UK tax perspective, you must extract during an entire non-resident tax year and you must be non-resident for more than 5 years.
4. Plan any sale of the company with your move
If you sell your UK company shares while you’re non-resident, there’s no UK capital gains tax.
This is with the exception of the 5-year rule that if you return to the UK within 5 years, the gains become taxable in the tax year you return to the UK. See HMRC manual RFIG21500.
In a simple example, if you leave the UK in 2026/27, sell shares realising £1,000,000 of gains in 2029/30 and return to the UK in 2034/35, the gains will not be taxed in the 2034/35 tax year.
5. Notify HMRC of your departure
You claim split year treatment and an ongoing non-resident status on the residence pages (SA109) of your self-assessment tax return.
The online deadline is 31 January after the tax year ends, so if you leave in 2026/27 your return is due by 31 January 2028.
You can register for self-assessment here.
Final thoughts
Moving overseas does not prevent you from continuing to own or run a UK company, and for many business owners it can work very well.
The important part is understanding how the move affects both your personal tax position and the company itself.
Your residence status, employment income, dividend payments and any plans to sell the business should ideally be reviewed before you leave. The decisions made during your first year overseas can have tax implications long after your departure.
Taking the time to get these arrangements right from the outset will generally make the following years much easier to manage.
About the author
Emma McDermott ATT is the founder of Global Tax Consulting, a UK tax advisory firm specialising in expatriates, non-residents and internationally mobile individuals. She previously worked at Deloitte and has been a member of the Association of Taxation Technicians since 2020. For further guidance, read her leaving the UK guide.
This is sponsored content by Global Tax Consulting
