Moving away from the UK, withdrawing dividends and closing company

[zerosum]

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.

Follow-up question here. What if one moves abroad and liquidates, rather than taking dividends. E.g. tax residency established abroad; do MVL; receive distribution. If one moved back to the UK within 5 tax years, would one pay CGT on this with BADR (the artist formerly known as ER)?

[NowPermOutsideUK]

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.

Im interested out of curiosity on point 2

So just to be clear you would need to leave the UK and become non tax resident - How long does that normally take if you have employment offeralready? A year or thereabouts?

Then you would take the massive dividend and pay no UK tax but whatever tax in your non UK country - Add another tax year to do that

Then you have to wait five clear years before returning

So that means in an optimal solution you would need to be out of the UK for close to seven years to do this properly?

[zerosum]

Im interested out of curiosity on point 2

So just to be clear you would need to leave the UK and become non tax resident - How long does that normally take if you have employment offeralready? A year or thereabouts?

Then you would take the massive dividend and pay no UK tax but whatever tax in your non UK country - Add another tax year to do that

Then you have to wait five clear years before returning

So that means in an optimal solution you would need to be out of the UK for close to seven years to do this properly?

Tax residency is assessed on your SA on the basis of the Statutory Residence Test. So for example if you are in the UK for less than 16 days in a given tax year, you are non-resident for that tax year.

So if you are not resident in 20-21, and then move back in April '26, that is compliant. You're allowed to spend an increasing number of days in the UK as the year of your last tax residency recedes; see the SRT.

It's 5 years from the time of first not being resident, not from the time of receiving some sort of dividend or capital gain; doing this on day 1 would indeed seem a bit of a hostage to fortune.

Also worth noting that HMRC have deemed more days in the UK due to Covid to be truly exceptional circumstances.

[rootsnall]

I'd look into withdrawing the funds over a few years on a UK tax return at the 7.5% rate. You are only looking at £10k or so if it's doable.

[NowPermOutsideUK]

I'd look into withdrawing the funds over a few years on a UK tax return at the 7.5% rate. You are only looking at £10k or so if it's doable.

A good point actually - you can use your personal allowance an lower dividend rates

If married after five years you would have moved 100K plus

[rootsnall]

A good point actually - you can use your personal allowance an lower dividend rates

If married after five years you would have moved 100K plus

You can use the 7.5% on the lower tax band, so it would be done in 3 years.

[zerosum]

I'd look into withdrawing the funds over a few years on a UK tax return at the 7.5% rate. You are only looking at £10k or so if it's doable.

By virtue of not being UK tax resident, the UK personal allowance and dividend rates don’t apply. If you move back within 5y, you are taxed on the entire amount taken as if you had withdrawn it all in the year of return - this legislation is an anti-avoidance measure.

Which is why liquidating and paying CGT with or without BADR/ER is probably a better move. Just not sure if BADR would be applicable and if so what deadline after liquidating would apply.

[rootsnall]

By virtue of not being UK tax resident, the UK personal allowance and dividend rates don’t apply.

HS300 Non-residents and investment income (2017) - GOV.UK

I think it used to be that you could pay out the dividends with no extra tax in the UK. Not sure now but think it'll be in that lot above.

Aha, just read your reply Zerosum, so you get caught up in the anti avoidance if you return within 5 years.

I got caught in some messy cross country tax issues yonks back.

[cwah]

Or just put then gradually into your pension at £40k / year tax free. It locked it up until 57 yo but then you are free to come back anytime in the UK should a gig becomes available

[NowPermOutsideUK]

Or just put then gradually into your pension at £40k / year tax free. It locked it up until 57 yo but then you are free to come back anytime in the UK should a gig becomes available

That doesnt really work if you are 20 years away from 57 does it

And the pension rules and the tax system cannot be trusted in the UK - I dont like this stuff the pension idea unless it really is the last resort