A UK limited company will always remain UK-resident for as long as it exists, and its registered office must always stay in the same country. The only way you can officially move your company’s registration to another country is by dissolving it in the UK (closing it down) and incorporating it through the relevant registrar of companies in another country.
Alternatively, you could register a new company in a different country and use your existing company name. This will be 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 company in a foreign country. You can base your operations wherever you like. In fact, your UK-registered company can trade in multiple locations anywhere in the world.
This is particularly common with large corporations that have overseas branches of shops, hotels and offices, and it is useful if you want to move abroad but you do not want to give up an established business and extensive client base, or go through the hassle of incorporating a new company abroad.
Tax treatment of UK company trading overseas
An overseas branch of a UK-resident 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 19% 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 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 overseas.
- Double taxation relief is restricted to the amount of UK tax on your overseas profits.
- Trading losses from overseas activities can be relived 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 reside outside the UK (183 days or more in a tax year) there will be personal tax implications for the income you receive through your 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 £11,850 (2018-19).
- 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 residency 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 £2,000 (2018-19) of dividend income will be tax-free, other than the 19% 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.
Automatically UK resident:
- 183 days or more spent in the UK during the tax year.
- 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.
- Less than 16 days spent in the UK, or 46 days if you have not been classed as a UK resident for the past three tax years.
- Work abroad full-time (average of at least 35 hours/week) and spend less than 91 days 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’, and 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 in which it is incorporated, 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 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. Your company will still be registered in England and Wales, you can continue to trade there, 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 and 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 new 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 up strong relationships.
Depending on the type of products or services you provide, you may not have to lose your existing customers, so this is 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. England and Wales is a single jurisdiction because litigation is dealt with by the same court. Scotland and Northern Ireland both have completely separate legal systems and courts. The jurisdiction in which you choose to register your 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 company registered in England and Wales can have its registered office address in either country.
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 alone can be changed to one registered in English and Wales company, instead. To make either one of these changes, the following steps are necessary:
- Shareholders must pass a special resolution approving the change.
- The Director must complete 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 being passed.
- If you also need to change the situation of your registered office, the director will have to complete form AD01 ‘Change of registered office address’ and deliver it to Companies House at the same time.
The names of companies registered in England and Wales must end with the English name ending of ‘Limited’ or ‘LTD’. However, companies registered in Wales alone can choose to end their names with the English version or the Welsh version – ‘Cyfyngedig’ or ‘CYF’. 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 your company details or file information with Companies House, you can use our Online Company Manager free of charge. All information delivered via this software filing system is safe and secure – click here to find out more and register a free account today.