Setting up a UK company as a non-resident. Here we’ll look at the options for registering as either a limited company or a Sole trader and the different options depending on whether you are resident in the UK or abroad.
Sole trader
The simplest form of registration is a sole trader. This is an individual registered to pay tax on their personal earnings. The registration is with His Majesty’s Revenue and Customs (HMRC) and enables a person to do tax returns at the end of each trading year.
All you need to register as a sole trader is a National Insurance number (NI). In the UK NI numbers are allocated to children near to their 16th birthday and are sent out to most in the post. If you don’t know what yours is, you can find out https://www.gov.uk/lost-national-insurance-number
To apply for a NI number you need to fill in an application directly with HMRC https://www.gov.uk/apply-national-insurance-number it generally takes around 4 weeks for the application to complete and your NI number to be allocated.
Once you have your NI number you can register for self-assessment, also known as sole trader registration. For us to do the registration order here: https://www.duport.co.uk/sole-trader-registration
You can live abroad and be a sole trader to pay tax in the UK, however you would already need to have a NI number. At present you can only apply for a NI number if you are resident in the UK. You would need to already have a NI number to register as a sole trader living abroad. The tax implications for being sole trader and resident abroad are different to those of UK residents. Broadly speaking this is because as non-resident you do not receive a personal tax allowance.
Most sole traders file a self-assessment tax return to HMRC at the end of each year, and HMRC then work out how much tax and National Insurance they need to pay according to their financial submission.
Limited company
If you live abroad without a UK NI number and still want to have a business registered in the UK, the option would be to have a limited company. Officers of a limited company; directors, shareholders, and Persons with Significant Control, do not need to be resident in the UK. The limited company must have a registered office address in the UK: Duport can offer this, if you don’t have a UK address. https://www.duport.co.uk/related-services/registered-office subject to anti-money laundering ID checks.
Although you are running the company from abroad there are still UK rules and requirements that the company will have to adhere to.
- Paying corporation tax on all profits.
- Filing annual accounts to the Companies House.
- Submit your company tax return to HMCR each year.
Many limited company owners (shareholders) choose to take payment through share dividends, as these are taxed at a lower rate. However, there is also the option for a more traditional PAYE (Pay As You Earn) payment system for directors, shareholders, and staff, but as a non-resident you will not have a UK personal tax allowance so this many not be the most efficient way of receiving pay. PAYE is an allowable expense when calculating profits and paying corporation tax, whereas dividends are not. Therefore, you need an accountant to work out exactly what is the most tax efficient way of being paid. You must also adhere to the tax laws in your resident country. This is something a local accountant or tax specialist would be able to advise on.
Limited companies must, by law, have a separate bank account, in the business’s name. This does not mean the bank account needs to be in UK, but a UK-based business with a bank account abroad is likely to incur more fees when making UK based transactions. Although many high street banks require officers to be present at the account opening, some online only banks can do the required anti-money laundering checks and open bank accounts for customers based overseas. All of our company incorporations include a bankig option for non UK residents.
Even with officers overseas, VAT registration is still voluntary until the turnover reaches the threshold, currently £85,000. HMRC dictate that if the following 3 conditions are true it becomes compulsory to be VAT registered. 1, you are based outside the UK, 2, The business is based outside the UK, 3, You supply goods or services to the UK (or will in the next 30 days). Therefore, with a UK registered company this specific VAT registration requirement would be eliminated.
National Insurance contributions are not payable if you are a director living abroad, you would need to adhere to local tax requirements instead. However, if you were temporarily living abroad, or wanted a UK state pension if you were intending to be resident in the UK in later life you may wish to make voluntary NI contributions.
As with all businesses there are tax implications which means it is advisable to have a good accountant able to advise on local and UK tax matters from the onset.
Now you know how to start up a UK company as a non-resident, it seems like the perfect moment to share something that will make your journey a lot easier.
Starting a UK company as a non resident can be quite overwhelming considering all the things you need to learn and understand.
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Our package is specifically tailored for non UK resident directors. With this service you not only get a UK registered office service that includes mail forwarding but we also provide UK service addresses for all directors.
We will ensure that you have all the necessary legal documentation to remain fully compliant.
We’ll connect you with our global banking partner that makes establishing an account as a non-UK resident easy (often this is the one of the biggest obstacles).
And remember, we are always here to offer our guidance and support at every step of your journey.
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