Should I Relocate my UK Business Oversees?

Brexit, Scottish Independence, the rise of populism and nationalism… we are in, without doubt, one of the most unsettled political eras in recent times.

This lack of stability in the political environment has created an incredible amount of restlessness amongst UK businesses as they await decisions from the political elite that could have drastic implications for their commercial outlook.

Some UK business owners are so disillusioned with the current political environment that they are seriously considering relocating to a foreign country. In this two part blog we attempt to address some of the practicalities that face them.

During the lead up to the vote on Scottish Independence the question was whether Standard Life (amongst several other financial and non-financial institutions) would up-sticks and move its headquarters from Edinburgh south of the border. In the lead up to the Brexit referendum several multi-national incorporations made it clear that a UK outside of the European Union’s single market would not provide a suitable base in which to trade with Europe or the rest of the world.

Whilst Scottish Independence lies dormant for now, Brexit has become a reality. The subsequent decisions from these large multinational corporations has dominated the headlines in several cases. What hasn’t been so well documented is how these tumultuous political times are affecting small to medium sized entities across the UK.

When a large corporation decides it isn’t happy in its current environment it appears to have the ability to just pack its things and move abroad, all with minimal effort involved. But what is really involved in moving a company’s interests to a foreign country? What are the options available to smaller companies when their domestic market is no longer commercially viable?

In this article we will provide an overview of the trading options available for moving a business abroad as well as the regulations that govern residential status. For those who want to know more we will provide a follow-up article exploring the various options and their respective pros and cons.

Moving a Limited Company Abroad
With regards to trading in a foreign country there are three main options:

  1. Register a new limited company in the jurisdiction of your choosing and then dissolve your current UK company. Transferring your trade and assets between the two.
  2. Register a new limited company in the jurisdiction of your choosing whilst maintaining your UK company and therefore creating a group of companies.
  3. Maintaining your UK company whilst living and trading abroad.

Each of these options have their benefits and shortcomings which should be considered before the bags are packed. As already mentioned we will explore these options in greater depth in a subsequent article.

Residency for Income Tax

Your UK residential status affects whether you need to pay tax in the UK on any foreign income. Your residential status normally depends on the number of days you spend in the UK during the tax year. The rules around tax residency are complex and we would urge that you seek professional advice before assuming you are non-resident. If you are a GWA client then please get in touch of the partner in charge of your affairs.

You will automatically be considered a UK resident if either:

  • You spend 183 days or more in the UK during the tax year.
  • Your only home is in the UK and you spend a minimum of 30 days there in the tax year (you must own, rent or live in that property for at least 91 days in total)

You will be automatically non-resident if either:

  • You spend fewer than 16 days in the UK (or 46 days if you have not been classed as a UK resident for the previous three tax years).
  • You work abroad full-time (average of at least 35 hours a week) and spend fewer than 91 days in the UK, of which fewer than 31 days are spent working.

When you first move abroad, you will be subject to split-year treatment, whereby in one part of the year you will be resident and the other ‘non-resident’. You will only be liable for UK tax on foreign income on the time you lived in the UK during that year. This will be applied through PAYE or when you file your tax return.

Globalisation driven by rapid technological advances has removed many barriers to communication, trade and travel. However the decision to move your business abroad will have potentially huge implications not only financially but personally and is not one we would recommend taking lightly or hastily. Each overseas jurisdiction will have its own regulations governing taxes, visas, work permits and the like. We recommend that you clearly know the reasons for carrying this through, carry out thorough research and planning including taking appropriate financial and legal advice.

Stuart Millar
Greaves West & Ayre


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