Once a limited company has been incorporated in one of the UK’s three jurisdictions (England & Wales, Scotland, or Northern Ireland), the company will remain registered there until it is dissolved (closed). This means that you cannot change which jurisdiction your UK limited company is registered in. However, there are ways that you can move the business to a different country, which we will discuss throughout this blog.
The only way to officially move your company’s registration to another country is to dissolve it and incorporate a new company in the preferred jurisdiction. When your new company is set up, you can transfer your business assets from the existing company.
Alternatively, you could register a new company in your preferred country and use your existing company name. This is permitted because both companies will be part of the same ‘group’. These processes, however, can be time-consuming and costly.
The good news is you don’t have to do either of these things to trade through your existing UK limited company in another part of the UK or in a foreign country. You can base your business operations wherever you like. In fact, your company can trade in multiple locations around the world.
This is particularly common with large corporations that have overseas branches of shops, hotels, and offices. Taking this approach is useful if you want to move to a different country without having to give up an established business and extensive client base, or if you’d rather avoid the hassle of incorporating a completely new company.
Tax treatment of a UK limited company trading overseas
An overseas branch of a UK limited company is effectively an extension of UK trade, so there will be a number of tax implications when you start trading outside of the UK:
- UK-registered companies are subject to Corporation Tax on all profits and chargeable gains from the UK and abroad.
- Overseas activities may give rise to a taxable presence in that country if you have a fixed place of business there, or if you are negotiating and concluding contracts in an overseas country where you permanently reside. In such instances, your company will have to be registered with an overseas tax authority.
- Double taxation relief is given when profits from overseas activities are taxed both in the UK and abroad.
- Double taxation relief is restricted to the amount of UK tax on your overseas profits.
- Trading losses from overseas activities can be relieved against UK profits.
- UK capital allowances are available in respect of any plant and machinery purchased overseas.
Tax treatment of non-UK resident directors and shareholders
If you permanently live outside the UK (183 days or more in a tax year), there will be personal tax implications for the income you receive through your UK limited company:
- As a company director, you will still be ‘employed’ in the UK because your company is registered in the UK.
- You will have to pay personal tax in the UK for income received from any time spent working in the UK (this includes attending just one board meeting). However, you should still be eligible for your tax-free Personal Allowance of £12,570 (2023-24).
- If you are required to pay personal tax and National Insurance in the UK, your company will have to remain registered for PAYE.
- You may have to pay National Insurance Contributions on UK income.
- Your country of permanent residence may tax you on your UK income, but you will be able to claim tax relief if that country has a ‘double taxation agreement’ with the UK.
- The first £1,000 of dividend income will be tax-free, other than the Corporation Tax that is deducted from company profits before dividend income is distributed. Above that amount, you will pay dividend tax on any dividend income received in the same year.
- You will still have to report your dividend income on a Self Assessment tax return if you are liable for Income Tax in the UK. You won’t be taxed on it, but you still have to report it to HMRC.
Am I a UK resident or non-UK resident?
Your UK residential status usually depends on the number of days you spend in the UK during the tax year, which runs from 6th April to 5th April the following year.
You are automatically a UK resident if:
- you spend 183 days or more in the UK during the tax year
- your only home is in the UK (you must own, rent, or live in that property for a minimum of 91 days in total) and you spend a minimum of 30 days there in the tax year
You are automatically a non-UK resident if:
- you spend less than 16 days per tax year in the UK, or 46 days if you have not been classed as a UK resident for the past three tax years
- you work abroad on a full-time basis (an average of at least 35 hours/week) and spend less than 91 days per tax year in the UK, of which less than 31 days are spent working
When you first move abroad, you will be subject to split-year treatment. One part of the tax year will be ‘non-resident’; the other part will be ‘resident’. You will only be liable for UK tax on foreign income based on the time you lived in the UK during the tax year. This will be applied automatically through PAYE or when you file your Self Assessment tax return.
Moving your company to a different part of the UK
Whilst you cannot move the residency of your company from the jurisdiction it’s incorporated in, you can easily base some or all of your activities in a different part of the UK. This is not as complicated as moving yourself and your business activities overseas, because your company profits and personal income will continue to be taxed under the same UK tax regime.
If your UK limited company is registered in England and Wales, for example, and you want to relocate to Scotland or Northern Ireland, you can move your business activities with you. You simply need to maintain a registered office address in England or Wales.
Your company will still be registered in England & Wales, you can continue to trade there if you want, your statutory mail will be delivered to your registered office in England or Wales, and any legal matters relating to your business will be dealt with by the courts in England & Wales. You and your company will still be taxed in exactly the same way.
Should I set up a new business address?
You should set up a business address in whichever part of the UK you move to. This will enable you to establish a relevant geographical presence, build relationships with new clients and contacts, and provide a suitable address for accepting returns, invoices, and other important correspondence.
If you have existing business addresses in other parts of the UK, you should consider keeping them for mailing purposes, especially if your company is well established in these places. This will provide a sense of security and professional continuity to existing clients and contacts with whom you’ve built strong relationships.
Depending on the types of products or services you provide, you may not have to lose your existing customers, so this could be an effective and affordable way to maintain stability if you decide to move. Just make sure you can get your mail forwarded from your current business address to the new one.
Why can I not move my registered office?
Companies House incorporates limited companies in three separate jurisdictions in the UK, rather than just the ‘whole of the UK’. England and Wales, although two separate countries are both subject to English Law. This means that they form a single jurisdiction, with litigation being dealt with through the same Courts.
Scotland and Northern Ireland are completely separate countries that, along with England and Wales, form the United Kingdom of Great Britain and Northern Ireland. Both countries have separate legal systems and Courts – Scotland is subject to Scots Law, and Northern Ireland is subject to Northern Irish Law.
As a result of the UK’s somewhat complex configuration and various legal structures, the jurisdiction in which you choose to register a company will forever dictate the location of your registered office:
- Companies registered in England and Wales must maintain a registered office in England or Wales
- Companies incorporated in Scotland must maintain a registered office in Scotland
- Companies in Northern Ireland must maintain a registered office in Northern Ireland
The location of your registered office will not affect your trading activities in any way. Registered office rules apply to all sizes of incorporated businesses, even multinational companies with branches all over the world. If you want to trade in different parts of the UK or overseas, you can easily set up a business address wherever you would like to establish a presence or be contacted by clients and other third parties.
Changing an English and Welsh company to a Welsh company, or vice versa
A limited company registered in England and Wales can have its registered office address in either country, and it can switch the situation of its registered office from one to the other whenever it wishes. This is because England and Wales are regulated by a single legal system.
It is also possible for an English and Welsh company to be changed to a Welsh-only company, provided its registered office is situated in Wales. Likewise, a company registered in Wales-only can be changed to one registered in England-only. To make either one of these changes, the following steps are necessary:
- the company shareholders must pass a special resolution approving the change
- the company director must complete Companies House form AD05: ‘Notice to change the situation of an English and Wales company or a Wales company’
- a copy of the resolution and form AD05 must be delivered to Companies House within 15 days of the resolution being passed
- if you also need to change the situation of your registered office, the director will have to complete Companies House form AD01 ‘Change of registered office address’ and deliver it to Companies House at the same time.
The names of companies registered in England & Wales, Scotland, and Northern Ireland must include ‘Limited’ or ‘LTD’ at the end. However, companies registered in Wales-only can choose to add the Welsh equivalent (Cyfyngedig or CYF) to the end of their names. If you need to make any such amendments, you will have to file Companies House form NM01 ‘Notice of change of name by special resolution’ before changing the situation of your company.
If you need to make any changes to the details of your UK limited company, or file information at Companies House, you can use 1st Formations’ free Online Company Manager. All information delivered via this software filing system is safe and secure.