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Process for dropping my UK tax residency

theviewer1985

theviewer1985

New member
Mar 27, 2023
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#1
Hey again!

My first one was a little more vague about how to get my company offshore and quite honestly, the replies BLEW MY MIND. This forum is incredibly helpful and so friendly. I love that we are all like-minded. I asked similar on moneysavingexpert once, and several folks condemned me for not wanting to pay taxes in UK.

Anyway, my second post is a little more specific to dropping my UK tax residency. This would be a lot easier, if I was starting the process a few months ago, but I am very aware that the new tax year is upon us, so have several questions and ideas that I want to clarify so that I don't F*** up this entire year!

I know dropping tax residency is a little grey and different for everyone, so let me start by saying I ran through the game on Guidance – Guidance – GOV.UK with some hypothetical answers and passed with flying colours. We don't have kids. Its looking increasingly likely that we won't own a house here, but if we do, then we will be renting it out (in that game above, I pretended we did own a house to make it tougher, and it didn't cause grief)

Its important to note, we currently own a UK LTD company, me and my GF are the only employees and pay ourselves a salary for the last 2 years. If we pull the trigger on this move, i will work flat out to get it all done ASAP. Anyway, my questions.

1. Should I IMMEDIETLY stop paying a UK salary? Our first one of the 2023 tax year is due in 15 days. Or is it okay to recieve a salary providing i try to keep it to no more than 3 months?

2. Im planning on stopping the 'payouts' from our Adult subscription sites right away so that they stop going into the UK LTD where they will get taxed heavily. They will just get stored up on the website itself. If all of this goes belly up, then i will just unlock them again so they go into the UK LTD again, no dramas. However, if all works out, once i open the LTD company in our chosen destination (Cyprus or Romania i reckon) i plan to unlock the payouts again so they flood into the new company account, ready for us when we move. My theory is we wont employ anyone, or pay out dividends or salary from the foreign LTD. Just keep it there during the crossover, which hopefully wont be longer than a month or two. Is that okay to do?

3. How long realistically do I have from April 6th (tax year start) to get the hell out? On one hand i see it as very liberal (no more than 183 days) but other people seem very strict and say don't even spend a month here. As it stands i feel confident that 90 days should be my cut off in UK. Giving me 3 months, which feels okay to me to get stuff done.

4. At what point do i have to tell HMRC anything? And how is that done... is it just a website registration thing where i have to prove im living abroad via a rental contract or something?

5. Lastly, is it okay to leave smaller chunks of our business going into the UK LTD. For no reason other than it just being easier at this point. Of course we wont be pulling any salary or dividends from it, but just letting it build up in the UK company account. Or is it a case that even if we dont pay ourselves, that is something they will deem as "living in UK still"? If i absalutly MUST move it, then i will. But if its totaly normal to do as i explained, then its a nice option to have.

Thanks all :)
 
#2
You've got quite a few questions there, so I'll try to answer at least some of them.

First and foremost, your personal tax residency is different from your company residence. I mention this fact because the requirements are different for you and your company to be considered/not considered UK tax residents and subsequently be liable for UK tax. If you are not a UK tax resident you are only liable to pay tax on certain UK income: Tax on your UK income if you live abroad

This should help you determine how to structure the payments to avoid it.

For personal tax residency, UK has very explicit rules. Here is a flow chart by KPMG: https://assets.kpmg.com/content/dam/kpmg/pdf/2016/01/statutory-residence-test-flowchart.pdf

This should help you answer question 3. (ie depending on your circumstances different number of days will apply)

For question 4, once you leave/have a date of departure, you need to fill out P85 form: P85.

Finally, if you leave part way through the year, you may be under the split year treatment: What is Split Year Treatment? And when does it apply?.

It is much cleaner to leave before the next tax year starts to avoid the split year treatment if possible.

None of the info above is advice. Just some information from open sources to consider.
 
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#3
You beat me to it ;).
 
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#4
Larin said:
You've got quite a few questions there, so I'll try to answer at least some of them.

First and foremost, your personal tax residency is different from your company residence. I mention this fact because the requirements are different for you and your company to be considered/not considered UK tax residents and subsequently be liable for UK tax. If you are not a UK tax resident you are only liable to pay tax on certain UK income: Tax on your UK income if you live abroad

This should help you determine how to structure the payments to avoid it.

For personal tax residency, UK has very explicit rules. Here is a flow chart by KPMG: https://assets.kpmg.com/content/dam/kpmg/pdf/2016/01/statutory-residence-test-flowchart.pdf

This should help you answer question 3. (ie depending on your circumstances different number of days will apply)

For question 4, once you leave/have a date of departure, you need to fill out P85 form: P85.

Finally, if you leave part way through the year, you may be under the split year treatment: What is Split Year Treatment? And when does it apply?.

It is much cleaner to leave before the next tax year starts to avoid the split year treatment if possible.

None of the info above is advice. Just some information from open sources to consider.
Click to expand...
Thanks for this. That flowchart is useful, although the double negatives were a mind spin lol. Here are my result, with what I believe is the best chance I've got: CleanShot 2023-04-03 at 14.28.41

Unfortunately it wouldnt be possible to leave within 16 days - however it says providing we haven't worked full time in the UK for more than 31 days then that does give us up to 91 days to get out.

This leads me back to my first question, would stopping my salary now help? If I don't receive a salary at all, in the 2023 tax year, then presumably that means, technically I haven't worked at all. Which gives me the 91 days wiggle room to leave. Does that seem plausible... or nah?

If so, can I simply just order my accountant not to pay our salary... or would I have to like, officially fire myself and get a p65 or some nonsense
 
#8
theviewer1985 said:
Thanks for this. That flowchart is useful, although the double negatives were a mind spin lol. Here are my result, with what I believe is the best chance I've got: CleanShot 2023-04-03 at 14.28.41

Unfortunately it wouldnt be possible to leave within 16 days - however it says providing we haven't worked full time in the UK for more than 31 days then that does give us up to 91 days to get out.
Click to expand...
I think you misunderstood my comment around split year treatment. Please have a look and ensure that you will be able to apply it when you do leave. It is not a matter of leaving within 16 or 31 days. If you leave by April 6, this will be irrelevant as long as you fulfil the criteria above.

You will continue to be a UK tax resident until you leave the UK whenever that happens during the year. The dates you mention will apply after you leave.
theviewer1985 said:
This leads me back to my first question, would stopping my salary now help? If I don't receive a salary at all, in the 2023 tax year, then presumably that means, technically I haven't worked at all. Which gives me the 91 days wiggle room to leave. Does that seem plausible... or nah

If so, can I simply just order my accountant not to pay our salary... or would I have to like, officially fire myself and get a p65 or some nonsense
Click to expand...
I do not know the nature of your employment, but provided you are a full time employee in the company, employment law would very much apply to you. (and its P45 not 65). So simply stopping paying yourself a salary does not mean you have stopped working for the company, full time in the UK.

How it works in practice may be different from the letter of the law of course.
 
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