What happens when I become an offshore shareholder?

[alphadog]

I have an update on this thread for anyone who is interested...

Advice I have received indicates that my original plan is possible if I become non-resident for uk tax and remain non-uk resident for tax for a period of at least 5 years.

Unbeknownst to me, new anti-avoidance legislation was introduced in 2013 to prevent people becoming non-uk resident for a relatively short period of time, extracting all their UK retained profits as a tax free dividend, then becoming UK-resident again. Fair enough.

Only thing is, we have absolutely no idea if we are going to be non-uk resident for 5 years or more. Maybe we'll be back in a couple of years time with our tails between our legs. Which makes it a tricky judgement call on my part... probably going to do MVL and take the 10pc ERCGT up front, rather than risk paying a huge amount of higher rate dividend tax if we return within 5 years.

Some further discussion here:
http://www.taxation.co.uk/taxation/A...-and-dividends

[prozak]

Move to NZ.

Tidy up all your affairs here. Establish full year residency. No rush as you have 5 years.

Pay dividend

Pay no Tax.

It is not so hard. The difficulty is when you rush over there and complicate things by still being resident here.

[ContrataxLtd]

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

Hi Alphadog

Have a read of this HMRC manual:

SAIM1170 - Savings and investment income: non-residents

You probably won't have a UK tax liability on the dividends but you definitely need to check your residency status when you leave to ensure you become non resident in the UK and also qualify for split year treatment (if you are leaving part way through a tax year). You need to look at the statutory residency tests and apply them to your specific circumstances.

HTH

Martin
Contratax Ltd

[alphadog]

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

Good advice. Trouble is, different accountants will give different answers (and certainly, my current accountant is no expert on non-resident taxes)...

[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.

[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.

[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'...

[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.

[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

[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

[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

[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.

[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.

[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