UK resident but currently expact - Digital nomad. What to do?

[iamalys]

Good morning everyone.

I need advice regarding my current situation.
I am a dual citizen - (British & Italian) and I am resident in the UK since 2010. I bought a house in London which legally still shown as my home residence since 2015.
Since 2010 I worked as a Digital Designer (all perm roles), but I also opened an Ltd. company for my family (they all live in Italy, and they needed a UK company for their Business as they were trading a lot with UK customers).
Basically, since November last year, I had my residency, full-time work, and this Ltd Company (where I am the director solely for 'legal purposes' of my family) in the UK.

Since November 2020, due to Covid, I decided to Italy to reunite with my family and I resigned from my full-time job and became a freelancer.
What I did was:
1) Rented my property (even if I am legally resident myself too at the same address)
2) Started trading actually from my family Ltd company.

The issue I now have is that not only the company I am trading from has nothing to do with the design (my family business is insurance), but I am receiving an income from both my house rental fee - 1.2k per month) and from my freelance business.
Regarding the latter, Q1 was basically 0.5k income per month but now Q2 looks like to be massively busy - with a projection of 3/4k per month.

Reading at my situation, I am asking for advice about the following:
1) Where I should actually get my residency? Shall I keep it in the UK, move it to Italy, or are there any other options to pursue my dream job as a Digi nomad Designer?
2) Company-wise - shall I detach completely my business from my family one? I used my family Ltd. solely because I needed to start working asap and my clients asked for an Ltd and didn't want to hear teh words 'sole trader'. Also, may freelancer portals allow you to register/seek work only if you have an Ltd or an Umbrella Company.
In my field seems sole traders aren't much considered, so I am basically forced to trade via an Ltd. Also bear in mind all my clients are mostly UK-based (I'd say 80% of my income is from GB) and one of their requirements is that I still (legally) live in the UK (that's why I haven't moved my residence here in Italy).

Any suggestions, possible scenarios are very much appreciated.

Thanks

Alys

 

[Martin Everson]

1) Where I should actually get my residency? Shall I keep it in the UK, move it to Italy, or are there any other options to pursue my dream job as a Digi nomad Designer?

Keep it in UK.

2) Company- wise - shall I detach completely my business from my family one? I used my family Ltd. solely because I needed to start working asap and my clients asked for an Ltd and didn't want to hear teh words 'sole trader'. Also, may freelancer portals allow you to register/seek work only if you have an Ltd or an Umbrella Company.

Detach your activity from UK company at some point. Not sure how you got away with Insurance and digital designer under same company from maintaining a Wise relationship perspective. Is Wise aware of the second activity yet?

Also bear in mind all my clients are mostly UK-based (I'd say 80% of my income is from GB) and one of their requirements is that I still (legally) live in the UK (that's why I haven't moved my residence here in Italy).

Then its clear. Keep residency in UK.

I am not sure if your objective is to save tax?

Just keep things simple and keep UK as your base. You can still hover around Europe etc spending time in Italy. HMRC won't care as long as your paying taxes to them. Italy gov however may think differently if they discover you send a lot of time in Italy with family.

 

[iamalys]

Keep it in UK.




Detach your activity from UK company at some point. Not sure how you got away with Insurance and digital designer under same company from maintaining a Wise relationship perspective. Is Wise aware of the second activity yet?



Then its clear. Keep residency in UK.

I am not sure if your objective is to save tax?

Just keep things simple and keep UK as your base. You can still hover around Europe etc spending time in Italy. HMRC won't care as long as your paying taxes to them. Italy gov however may think differently if they discover you send a lot of time in Italy with family.

Hi @Martin Everson - thanks so much for your reply. Yes I am planning to go back to the UK from time to time just to 'show up' but I am keeping my residency there.

I am of course trying to understand which scenario would be more tax-efficient for my case, but the issue is the in London there is definitely more work compared to Italy - and UK companies in the design field are seeking employees or contractors UK based - so another reason for me to look like I am living there.

I am just worried HMRC could find out that I am not actually living in the UK for a minimum of 9 months... that's all.

 

[Martin Everson]

I am just worried HMRC could find out that I am not actually living in the UK for a minimum of 9 months... that's all.

HMRC investigates you when you don't pay taxes. I don't think HMRC investigate why you are paying UK taxes...lol. But who knows maybe they could come to you and say we don't want your tax money and that according to the UK DTA with Italy you should be paying taxes in Italy .