What happens when I become an offshore shareholder?

[alphadog]

Hi All

I'm considering emigrating out of the UK permanently (to NZ). My UK ltd company has built up some nice retained profits.

Fortunately the tax man in NZ allows newcomers to bring all income from offshore into NZ free of tax for five years.

So, I plan on sending all of my UK ltd's retained profits as a dividend to myself in NZ subsequent to having moved there permanently. No tax due in NZ. What about the UK? I assume none, given that my primary residence for tax purposes will no longer be the UK? Once I have made the dividend payment from the UK company bank account to my personal bank account in NZ, will it be a simple case of getting the UK accountant to send the final UK ltd accounts and shut down the company?

It all seems a bit too easy

[TheCyclingProgrammer]

Have you asked your accountant? If tax could be due in the UK it might make more sense to pay dividends up to the higher rate over several years to avoid higher rate tax OR liquidate and claim ER and pay a small amount of CGT if you want all of the money immediately. Depends how much we are talking, but your accountant will know what's best.

[BlasterBates]

Normally dividends are taxed in the country where they're issued, so you'll probably be paying UK tax.

Generally non-residents pay tax on income sourced in the UK. So you pay UK tax on anything like rental and/or dividend income.

There are exceptions so good to take advice from an accountant.

As above you need to think about tax rates and thresholds, so staggering your dividends over more than one year may be tax efficient. The UK tax calculation will obviously exlcude any non-UK income.

[alphadog]

Normally dividends are taxed in the country where they're issued, so you'll probably be paying UK tax.

Generally non-residents pay tax on income sourced in the UK. So you pay UK tax on anything like rental and/or dividend income.

There are exceptions so good to take advice from an accountant.

As above you need to think about tax rates and thresholds, so staggering your dividends over more than one year may be tax efficient. The UK tax calculation will obviously exlcude any non-UK income.

Are you sure non-residents pay UK tax on UK ltd company dividends? Remember, no tax would be due in NZ.

Tax Forum :: Free Tax Advice • View topic - Dividends to non-resident shareholder

[LisaContractorUmbrella]

Are you sure non-residents pay UK tax on UK ltd company dividends? Remember, no tax would be due in NZ.

Tax Forum :: Free Tax Advice • View topic - Dividends to non-resident shareholder

You were tax resident in the UK when the company profits were generated so I believe that you will have to pay UK tax

[Eirikur]

Normally dividends are taxed in the country where they're issued, so you'll probably be paying UK tax.

This sounds correct as I had to pay tax in The Netherlands for dividends received over there,whilst being a tax resident in the UK

[meridian]

What happens when I become an offshore shareholder?

If the dividends are being paid out of retained earnings, then UK tax has already been paid on them by the company.

The question then turns on whether they are also subject to UK tax in your hands as the recipient. You'll need to check whether you are liable to continue to complete a self-assessment form as the director of a UK company, in which case you may still need to include the dividends in any assessment to HMRC.

If your NZ accountant confirms that you can bring overseas income in for 5 years, though, you should be able to space out your dividends over the years so that there is no additional UK tax to pay.

[alphadog]

You were tax resident in the UK when the company profits were generated so I believe that you will have to pay UK tax

There are some statutory references in this link which suggest that tax may not be payable in the UK:
Tax query for Non-Residents - Plz Help | UK Business Forums

I know for sure that some non-residents don't pay UK tax on UK ltd company dividends. There was a case a few years back of a well known man who owns a chain of UK shops whose wife legally collected a massive tax free dividend by virtue of her being resident in Monaco.

... Unless this is another case of 'one rule for the rich and another for us plebs'...

[LisaContractorUmbrella]

There are some statutory references in this link which suggest that tax may not be payable in the UK:
Tax query for Non-Residents - Plz Help | UK Business Forums

I know for sure that some non-residents don't pay UK tax on UK ltd company dividends. There was a case a few years back of a well known man who owns a chain of UK shops whose wife legally collected a massive tax free dividend by virtue of her being resident in Monaco.

... Unless this is another case of 'one rule for the rich and another for us plebs'...

I think the article refers to people who are non tax resident in the UK but have interests in UK companies but I don't think this would apply in your case for reasons previously stated.

[BlasterBates]

There are some statutory references in this link which suggest that tax may not be payable in the UK:
Tax query for Non-Residents - Plz Help | UK Business Forums

I know for sure that some non-residents don't pay UK tax on UK ltd company dividends. There was a case a few years back of a well known man who owns a chain of UK shops whose wife legally collected a massive tax free dividend by virtue of her being resident in Monaco.

... Unless this is another case of 'one rule for the rich and another for us plebs'...

This is a tricky area and you need to speak to an accountant. You might well be exempt.