Moving abroad, MVL, tax year and taxation

[twickamb]

Hello,

I now provide my services using my LTD here in the UK, where I also live and am tax resident.
I want to move abroad, change my residency and continue to provide my services remotely. My client is happy with me moving.
Questions/doubts I have is how to resolve this from taxation perspective.
As for my LTD, I want to shut it down via MVL. I wanted to have this fully done and cashed out by the end of 2022 so income from this does not spill to 2023 and does not count toward tax year 2023 abroad. Considering that all of my income in the UK will be made in calendar year 2022, I wonder what happens with the overspill of Jan-April 2023 due to how the tax year in the UK is structured? Do I need to pay tax for that bit (earned abroad though) to HMRC? Or could I request for some exception/proportion in the tax? By Jan 2023 I'd have no ties to the UK, apart from the customer I work for. I just asked my accountant about this, but Im curious if there were similar cases in this community.

Regards

[Lance]

lots of moving parts here.
It won't be possible to answer with one example.

You need to consider the following items as distinct and separate.
- company year end and CT/VAT
- personal tax (that's the only thing of interest for April, and unrelated to company financials)
- MVL - For a start is it the right thing to do?. How are you going to engage with the client? They might require you to use a LTD company anyway.
- are you sure you'll stop being tax resident? This is a complex area.
- client - they might be happy in principle but how's it going to work? How will they pay you? What tax regime will they be paying? And whilst your manager at the client is happy, is procurement/HR?
- tax situation in destination country - this could get really complex

You are not even close to knowing the questions to ask yet IMO.

[northernladuk]

Your client might be happy but the next probably won't and you most agencies won't deal with you when you are out of the country.

[BlasterBates]

When you move abroad, as long as you deregister all income earned after you leave won't be taxed.


https://www.gov.uk/tax-foreign-incom...%20conditions.

[ContractorPL]

Since you're mentioning MVL, I take it you have decent retained earnings within your LTD.
I'd scrutinize what the double taxation treaty between your home country and the UK says about the dividends.
Usually it's the case that you only pay dividend tax in the country you're tax resident, so if the rate is reasonable, it might be better than a lenghty and costly MVL.

Of course being tax resident home and non-resident in the UK is not quick and easy (see residency tests), it definitely won't be 1st Jan 2023 for you - you'd probably need to keep your LTD open for some time until this is the case.

[northernladuk]

We've a post about MVL taking a very long time so need to factor that in. Could put your plans on hold if you can't move until it's complete.

[jamesbrown]

Usually it's the case that you only pay dividend tax in the country you're tax resident, so if the rate is reasonable, it might be better than a lenghty and costly MVL.

Well, unless the jurisdiction you're leaving has anti-avoidance rules, and the UK does have these. If you return to the UK within 5 years, you will pay taxes on the full dividends or capital gains in the UK on the year of your return for any gains or dividends from assets or profits, respectively, that were earned in the UK in the years preceding these events and received while "temporarily non-resident".

In other words, you're probably better off with an MVL.

Although a more interesting question is how the 2-year rule in the TAAR would apply, should you decide to continue the same or a similar trade or activity overseas, as you clearly plan to do.