Originally posted by dsc
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Drawing dividends from UK LTD while working& living abroad
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Isn't there some sort of EU anti-avoidance legislation which means you get taxed more in the country of residence if you pay very little tax on your dividends in the UK? I just can't believe that you can move outside the UK, get a job which pays say 150k euros and still draw out £50k dividends with 7.5% tax paid on that without anyone thinking this is dodgy.Comment
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Originally posted by dsc View PostIsn't there some sort of EU anti-avoidance legislation which means you get taxed more in the country of residence if you pay very little tax on your dividends in the UK? I just can't believe that you can move outside the UK, get a job which pays say 150k euros and still draw out £50k dividends with 7.5% tax paid on that without anyone thinking this is dodgy.
But the UK only taxes it without taking your overseas income into accountComment
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Originally posted by dsc View PostIsn't there some sort of EU anti-avoidance legislation which means you get taxed more in the country of residence if you pay very little tax on your dividends in the UK? I just can't believe that you can move outside the UK, get a job which pays say 150k euros and still draw out £50k dividends with 7.5% tax paid on that without anyone thinking this is dodgy.Comment
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Originally posted by jamesbrown View PostThis only applies to dividends on UK profits made before you became a temporary non-resident. All UK dividends will be taxed as though they were declared in your tax year of return (if you return within 5 years) and will form the top slice of income as normal.
1. Leave the UK and get the non-resident status for tax purposes
2. Draw dividends in the period you are non-resident. Those dividends are for profits generated through the UK company before leaving the UK.
The dividends would be taxed in the period I'm away from the UK. I'm also thinking of paying the 12.5K salary and 2K in dividends. That would imply zero tax for the periods I'm away. I'm aware that if I return to the UK in the middle of the tax year, that will be a different story.Last edited by skysies; 14 September 2020, 15:27.Comment
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Originally posted by skysies View PostWell, that's a lot of hearsay I would say. I don't see why the HMRC will tax this in your tax year of return:
1. Leave the UK and get the non-resident status for tax purposes
2. Draw dividends in the period you are non-resident. Those dividends are for profits generated through the UK company before leaving the UK.
The dividends would be taxed in the period I'm away from the UK. I'm also thinking of paying the 12.5K salary and 2K in dividends. That would imply zero tax for the periods I'm away. I'm aware that if I return to the UK in the middle of the tax year, that will be a different story.
Good luck with that.
Finance Act 2013Comment
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Originally posted by skysies View PostWell, that's a lot of hearsay I would say. I don't see why the HMRC will tax this in your tax year of return:
1. Leave the UK and get the non-resident status for tax purposes
2. Draw dividends in the period you are non-resident. Those dividends are for profits generated through the UK company before leaving the UK.
The dividends would be taxed in the period I'm away from the UK. I'm also thinking of paying the 12.5K salary and 2K in dividends. That would imply zero tax for the periods I'm away. I'm aware that if I return to the UK in the middle of the tax year, that will be a different story.
Additionally, the picture is complicated by Brexit. You need 5-6 full tax years outside the UK, but ensuring this has become vastly more difficult (at least within the EU, and it was always difficult outside it) by virtue of the loss of freedom of movement. If you become legally resident in an EU country by the end of the transition period, and ensure that you aren't absent for more than six months in any rolling window of time for the subsequent 5 years until you qualify for permanent residency, you're OK. But if you want to continue to operate your UK ltd (e.g. because of UK agents) there might be CFC issues to consider.Comment
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Originally posted by jamesbrown View Post
Ok, let me give an example:
1. I leave the UK in tax year 2021. During that tax year, I start paying a salary for a max of 12.5K and withdraw dividends for max of 2K. These two are below the taxable threshold, so normally one won't pay any tax on them.
2. Then I come back to the UK in tax year 2023.
Do you mean that HMRC will then say that I already used all my tax-free allowances in 2021 and so I can't use them in 2023?Comment
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Originally posted by skysies View PostOk, let me give an example:
1. I leave the UK in tax year 2021. During that tax year, I start paying a salary for a max of 12.5K and withdraw dividends for max of 2K. These two are below the taxable threshold, so normally one won't pay any tax on them.
2. Then I come back to the UK in tax year 2023.
Do you mean that HMRC will then say that I already used all my tax-free allowances in 2021 and so I can't use them in 2023?Comment
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If it's for two years, and you're working through a local ltd in Europe, why not liquidate your current company and benefit from ER? You should be able to open a new one after two years.
Also bear in mind that the UK is unusual in having an April-April tax year, which can add to the difficulty in being absent for 5 tax years. You generally want the strongest proof possible that you have genuinely been elsewhere which means being registered and filing tax returns etc. elsewhere.Comment
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