Thinking about leaving the UK? What about your company?

Following one of the wettest starts to the year in the UK, it’s not surprising that many people are looking towards sunnier climates. The list of things to consider before emigrating is seemingly endless: where will I live? Do I speak the language? Does my dog need a passport?

Or perhaps you are the controlling shareholder and a director of a UK incorporated company. What does your emigration mean for the tax status of your company?

Your starting point

If you’re planning a relocation overseas while continuing to run a UK incorporated business, here’s what you need to know and the strategic options available to you.

One key reassurance: UK company law does not require directors to be UK resident. Moving out of the UK does not, on its own, prevent you from continuing as a director of your UK company.

The real issue lies elsewhere. A director’s own tax residency can impact the tax residency of the company, and a change in company tax residency could have a number of tax consequences.

Surely if my company was incorporated in the UK, it will be tax resident there too?

By default, yes. A UK incorporated company will be UK tax resident. A company may also be UK tax resident if its central management and control is in the UK, regardless of where it is registered.

In practice, this means that HMRC will look at where high-level strategic decisions are actually made, not where day-to-day operations happen, to determine if a company is tax resident in the UK.

Other countries have similar provisions. If a company becomes centrally managed and controlled from overseas as a result of a director relocating, it may become tax resident in another country as well as the UK.

Are there any options?

Early-stage planning gives you the most flexibility and helps avoid unintended tax consequences later. You may need to decide whether the intention is for the company to remain UK tax resident or not.

1. Maintaining UK tax residence

A director can continue running the company and maintain its tax residency status in the UK, provided that strategic decision-making clearly remains in the UK.

Alternatively, ensuring the company has other UK resident directors who genuinely participate in strategic decisions can strengthen the argument that the company remains UK resident for tax purposes.

This option reduces the risk of challenge from tax authorities on the basis that its only decision-maker now lives abroad.

2. Allow the company to become tax resident overseas (or dual resident)

If the company is centrally managed and controlled abroad, it could become tax resident in that country. If the UK and the other country have a double tax treaty, a dual-resident company is generally treated as resident where its place of effective management is located.

However, in most tax treaties this requires mutual agreement between the tax authorities on the residency of the company, which can be a complex and time-consuming process.

This route is complex and can trigger significant tax consequences, including potential deemed disposals of assets. It’s not necessarily a bad outcome, but it requires careful analysis before making any moves.

3. Incorporating a new company overseas

This is similar to the previous option but involves setting up a new company abroad to purchase and take over the trade and assets of the UK company. The new company will, by default, be tax resident in the country in which it is incorporated.

Again, exiting the UK can trigger significant tax consequences, and there are wider points to consider, including matters of company law.

Final thoughts

Relocating abroad while running a UK company is entirely possible, but the tax implications depend heavily on how you structure your governance and where strategic decisions are made. With thoughtful planning, you can choose the path that best aligns with your commercial and personal goals.

Before making any decisions, it’s important to obtain appropriate advice both in the UK and in the country you intend to relocate to, for both you and your company.

Need help?

If you’re considering a move overseas and want to understand the implications for your business, we’re here to support you. Early advice can help you avoid unexpected tax issues and give you confidence in your plans.

Get in touch with your usual Larking Gowen contact or email enquiry@larking-gowen.co.uk.

Sarah Caley