Question about taxes for a UK citizen

I have the opportunity to move away from the UK (working online), but I’m wondering what’s the best way to manage my taxes?

Should I set up a limited company in the UK (which I could claim back taxes)? My company is quite small, so I’m guessing the 10k per year limit for income tax might work for me. If so, would I need to spend a certain amount of time in the UK per year?

Or, would it be better to become a nomad and not be taxed at all. Although I’m wondering about what will happen to my UK pension/NHS benefits etc? Will I be able to come back to the UK whenever I want and continue to benefit from these (will I just pick up where I left off)? If I go down this route will I need a hongkong bank account and company registered in panama (or somewhere?). Would I need to become resident in one of these countries in order to obtain these things?

Cheers

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In bried, can you have your cake and eat it too? The answer is no.

If you want to be non-resident for tax purposes, HMRC tends to accept you being non-resident if you both have legal residence elsewhere AND go abroad to work under a full-time contract (it can be your own business).

This would also mean that you could not go back to the UK for more than 89 days per year for 5 years (preferable no more than 45 to be absolutely certain), and you would not have free access to the NHS (pension should be safe though).

Furthermore, using offshore entities while being UK tax resident won’t help much, as anti-avoidance rules basically makes it impossible to benefit legally by doing this as HMRC will more or less disregard the entity if they suspect that avoiding UK tax has been part of the motive.

In short, the UK taxman doesn’t like letting go of people. The only way of doing this safely is to make a clean break with the UK, establish legal residence elsewhere and show you have a job there (which, can be your own business).

People may say otherwise, but if they do, they are either ignorant, or trying to sell you something.

This is brilliant wfaler, thanks so much for your helpful answer.

It sounds like the best option for us (me and the wife) is to get a UK ltd company. We will earn so little in the first year anyway that we probably wont end up being taxed at all (not over 10k threshold).

I’m wondering if we do set up a UK company (and travel alot - like 300 days of the year), is there any requirement to stay in the UK for us in terms of citizenship? (ie, do we have to stay in the UK for 90 days or more per year to keep our residency in the UK?)

Whaaaaaat?! That’s wholly inaccurate. You don’t have to be a resident elsewhere to be a non-resident in the UK. You also don’t have to stay out of the country for 5 years for less than 89 days. Firstly, it’s 90 days (actually nights). Secondly, you’re a non-resident of the UK as soon as you spend no more than 90 days inside the UK within within a tax year or take up residency elsewhere.

Sounds like staying a UK resident is what you really want.

Pay yourselves £10,000 each from the UK LLC and claim expenses cleverly, then pay yourself dividends at 20%.

Make sure you keep up on the voluntary contributions for National Insurance (which you can backdate up to 6 years).

I think that’s all you really need to know. Staying a resident voluntarily even if you’re out f the country will mean that banking etc isn’t a pain in the bum. I learnt that the hard way after becoming a resident elsewhere that banks essentially stop being easy if you’re a non-resident.

Thanks travelrawr :smile:

I’m leaving my company and starting a consultancy. I’m wondering will I get hit with the IR35 if I continue to work for my current company (the company I am currently employed full time/permanent)? I will be working for other clients, but they may be my biggest client.

Cheers

Honestly, I have no idea. For in depth tax advise, always seek a professional.

For loose guidance, ask us :stuck_out_tongue:

The staturory residence test (https://www.gov.uk/government/publications/rdr3-statutory-residence-test-srt) actually defines days in the UK dependent on your ties to the country. It can go all the way down to 15 if you have a lot of ties remaining after leaving.

90 days is a gross oversimplification (and referring to “UK LLC” which is an entity that doesn’t exist in UK law doesn’t fill with confidence), and HMRC tend to wait >1 year to “sign you out” if you can’t show a job. If you don’t have a new foreign address on your form P85, well, legally you may not be resident, but HMRC may take you to court over it to make you prove it.

Yes, this is the thing that is making me want to leave the UK at the moment. It seems very strange that they would want to penalise people who are moving to contract roles (something that’s happening very often nowadays, due to internet flexibility). Why penalise people who are starting their own consultancy? This kills highly successful business before they have even started…

If the UK government want to create an IR35 why be so vague about the requirements? Why is it that we have to get insurance (just in case the inland revenue try to screw us and even then there is no guarantees, because the IR35 is so vague, these insurance companies can back out of their guarantees pretty easily it seems)?

It seems that the UK is not the place any more for a small fledgling business. Honestly I think about what I will be losing by leaving the UK and it’s not that much TBH, just pension (which is probably less than 6 grand a year, and I probably wont be able to claim it until I’m 102 by that point anyway)

Such a shame, I thought the UK would be leading the way in terms of new business, technology etc, but it seems like we’re actually going backwards. They seem to want to control every single tiny little detail of our lives, when actually they’re missing the really big things (like taxing starbucks/amazon).

Defies logic really :confused: , but then since when were the UK government logical about anything ???