Moving away from the UK, withdrawing dividends and closing company Moving away from the UK, withdrawing dividends and closing company
Posts 1 to 8 of 8
  1. #1

    Still gathering requirements...


    Join Date
    Apr 2012
    Posts
    79

    Default Moving away from the UK, withdrawing dividends and closing company

    Given reasonably large funds in ltd company (£150k+).

    Given no pressing need to take additional dividends this tax year.

    If one moves to another country with much lower (and non-banded) dividend tax, takes tax residency there, and is able to cut ties with the UK per the statutory residence tests, are there any issues with withdrawing all company funds as dividends in the other country (after a new UK tax year begins) and then closing the company down?

    I’m aware that one could not just do this and then the next day, decide to return to the UK and set up a new company.

    On the other hand, if circumstances changed (i.e. among other things Brexit gets shoved where the sun don't shine) and there was a wish to return to the UK, I would speculate that it would (theoretically?) be easier to open a new company having done this than if one had used a voluntary liquidation.

  2. #2

    Contractor Among Contractors


    Join Date
    Sep 2009
    Location
    Tunbridge Wells
    Posts
    1,595

    Default

    Two separate things here:

    1) anti phoenixing (TAAR) rules, that it sounds like you may be aware of. This is only relevant for capital gains following a liquidation anyway, which doesn't sound like something you're pursuing.

    2) temporary non-residence/disregarded income. Oversimplifying a bit, if you leave the UK, become non tax resident, take huge dividends, then return to the UK within 5 years, those dividends will be taxable in the UK on your return. You basically need to stay away for >5 years. These rules have nothing to do with whether you close your company or not.

  3. #3

    Still gathering requirements...


    Join Date
    Apr 2012
    Posts
    79

    Default

    Quote Originally Posted by Maslins View Post
    2) temporary non-residence/disregarded income. Oversimplifying a bit, if you leave the UK, become non tax resident, take huge dividends, then return to the UK within 5 years, those dividends will be taxable in the UK on your return. You basically need to stay away for >5 years. These rules have nothing to do with whether you close your company or not.
    Very helpful, thanks.

    Again, at the risk of over-simplifying, would the dividends then likely be taxable at such a rate that it would make little difference whether one had stayed or gone?

  4. #4

    Contractor Among Contractors


    Join Date
    Sep 2009
    Location
    Tunbridge Wells
    Posts
    1,595

    Default

    Quote Originally Posted by zerosum View Post
    Again, at the risk of over-simplifying, would the dividends then likely be taxable at such a rate that it would make little difference whether one had stayed or gone?
    Have never done it in practice, but my understanding is it will be taxable as dividends in the year of your return. Therefore the rate will depend on tax rates in place at the time, as well as your other income in that tax year.

    If tax rates remain broadly the same, and your other income in the year you left is broadly the same as your other income in the year you return, then yes, it would make little difference (ie no long term saving by delaying the dividend until after you left).

  5. #5

    Fingers like lightning


    Join Date
    Nov 2015
    Posts
    528

    Default

    Quote Originally Posted by Maslins View Post
    2) temporary non-residence/disregarded income. Oversimplifying a bit, if you leave the UK, become non tax resident, take huge dividends, then return to the UK within 5 years, those dividends will be taxable in the UK on your return. You basically need to stay away for >5 years. These rules have nothing to do with whether you close your company or not.
    It's usually best to set up a new company abroad, transfer the shares in the UK company to that new foreign company and then have the dividends paid to it rather than to yourself.

  6. #6

    Still gathering requirements...


    Join Date
    Apr 2012
    Posts
    79

    Default

    Quote Originally Posted by m0n1k3r View Post
    It's usually best to set up a new company abroad, transfer the shares in the UK company to that new foreign company and then have the dividends paid to it rather than to yourself.
    Do you know of anywhere this process is described in more detail? Presumably I can then withdraw the 'new' dividends from the foreign company and not fall foul of this (rather draconian) 5 year limit?

  7. #7

    Respect my authoritah!

    NotAllThere's Avatar
    Join Date
    Aug 2007
    Location
    Far away from HMRC
    Posts
    20,958

    Default

    In some countries, dividends are taxable as income. So you may have to pay tax in your country of residence. See here for example: How does it work with taxes already paid in UK? - English Forum Switzerland
    Hmm. I'm beginning to suspect that you need to find all the packing the computer came in...

  8. #8

    Should post faster


    Join Date
    Jul 2019
    Posts
    173

    Default

    Quote Originally Posted by zerosum View Post
    Do you know of anywhere this process is described in more detail? Presumably I can then withdraw the 'new' dividends from the foreign company and not fall foul of this (rather draconian) 5 year limit?
    More correctly, the dividends would be paid to the foreign company. You would then use whatever is the most tax-efficient way in that foreign country to extract those dividends from that company.

    If you come back to the UK within the 5 years, those dividends were still paid to the foreign company, and not you.

Posting Permissions

  • You may not post new threads
  • You may not post replies
  • You may not post attachments
  • You may not edit your posts
  •