The UK Limited Company for Non-Residents is something that could come handy in your tax structuring.
I always get many questions about where to set up a company as a digital nomad. Many people also seem to look into the direction of the United Kingdom for this. So, let’s have a closer look to find out if this is actually worth considering.
Can Non-Residents Open a UK Limited Company?
Yes, non-residents can open a UK Limited company.
You don’t need to live in the UK to open a UK Limited Company for non-residents as there is no limitation on who can be the owner of a UK company. Therefore, you can use the UK to set up your offshore company.
Benefits of Setting Up a UK Limited Company as a Non-Resident
There are multiple benefits of setting up a UK Limited Company as a non-resident.
First of all, you will establish a company in a country with a good business reputation which will give you access to the global market.
Furthermore, by incorporating a company, you can benefit from limited liability. If you run your business in your personal name, any debtors from the business can also come after your private assets. By running your business through a legal entity like a UK Limited, you shield your personal assets from any business debts.
The fact that you can set up your company fully remote without visiting is probably also a big advantage for many. However, this is at the same time an attention point from a tax point of view which we’ll discuss more in detail later on.
Requirements for Non-Residents to Register a UK Limited Company
Your UK limited company for non-residents will need at least one shareholder and one director. Both can be the same person and don’t need to live in the UK. So, you can take these roles on yourself.
Nevertheless, your business does need to have an official address in the UK though. Yet, there are service providers who can help you out with this.
Steps to Register a UK Limited Company as a Non-Resident
Hereby an overview of the steps to take if you want to register a UK Limited Company as a non-resident.
Choose Company Name
The first step is to choose a unique company name for your business.
You can check the Company Name Availability Checker to see whether the name you chose is still available.
Prepare Required Details
When incorporating your company, you’ll have to share some details about the shareholder(s) and director(s) of the company.
These details include:
- Full name
- Date of birth
- Nationality
- Service address
- Personal address
Furthermore, you’ll need to add proof of their identity through a passport or national ID.
This also means, you need to know who will be the shareholders of the company and who you will appoint as a director.
Obtain a UK Registered Office Address
Your company will need to have its registered office address in the United Kingdom.
If you can’t provide a UK address yourself where your company can have its office address, you can obtain such an address from a service provider (e.g. virtual office or accountant).
Draft Memorandum of Association & Articles of Association
The Memorandum of Association and Articles of Association basically set out the rules by which the company will be run and managed. It will include provisions regarding what rights and obligations the directors have, the objective of the company, etc.
For both, you can find templates on the official website of the UK authorities.
Register with Companies House
Once you completed all the aforementioned steps, you’re ready to do your company registration with Companies House. This is the official government agency responsible for registering companies in the United Kingdom.
HMRC Registration
Once your incorporation is done, you will also need to do some registrations with Her Majesty’s Revenue & Customs, the UK tax authority. You need to do this within three months after starting your business.
Which registrations you need to manage will depend on your business activities. Also here, I recommend using the services of a professional to assist you with this to ensure you don’t make any costly mistakes.
Tax Implications and Strategies for Nomads
If you open a company in the UK, your company will by default pay UK corporation tax. The general corporation tax rate is 25%. However, there is a lower tax rate of 19% for companies with a profit under GBP 50.000.
Yet, if you run your company from abroad, you might potentially trigger tax consequences abroad. This would be the case if you consistently run your company from one particular country. So, in case you have a home base somewhere else from where you run your business operations, you could also become liable to corporate income tax in that jurisdiction.
For this reason, it’s always important to consult with an international tax advisor before moving forward with a setup. In this way, you make sure you align the different countries and tax regulations.
Reach out to me if you need any help in this regard.
FAQs on UK Limited Companies for Non-Residents
Below we’ll discuss some of the Frequently Asked Questions regarding the UK Limited Company for non-residents.
What is a UK Limited Company?
A UK Limited Company is a company form in the United Kingdom. It’s a distinct legal entity which allows you to organize your business.
The UK Limited has shareholders who are the owners of the company. Furthermore, you will need to appoint a director to manage the day-to-day tasks.
A UK Limited can enter into contracts in its own name. The company is also liable to meet any obligations following from these business arrangements. Therefore, it’s a good way to limit the liability of the owners of the business.
Can I Set Up a UK Company as a Non-Resident?
Yes, you can set up a UK company as a non-resident.
In order to open a UK company, you don’t need to live in the United Kingdom as there are no restrictions on who can be the owner or director of a UK company.
Therefore, this option is also open to a foreign entrepreneur.
Nevertheless, you do need a business address in the UK. Yet, there are many specialized service providers who can provide you with an address or alternatively your accountant might be able to help you out with this.
Does a UK Company Need a Business Bank Account?
Yes, a UK company needs a business bank account.
How will you do business without a bank account?
Given that you’re going to enter into contracts on behalf of your UK company, any payments for business transactions should also run through an account registered on the name of the company.
You’ll be able to open a bank account on the name of your UK company with a traditional or physical bank in the UK or with one of the fintechs.
Do I Need to Visit the UK to Register a Company?
No, you don’t need to visit the UK to register a company.
As a non-resident, you can just open your company remote and there is no need to actually visit the United Kingdom.
Yet, you will need a local business address in the UK. Yet, you can also arrange this remotely. Furthermore, you do need to have the necessary information on the shareholders and directors ready when setting up the company as you need to share their details.
In order to make sure that you don’t make any mistakes while setting up your UK Limited Company for non-residents I recommend working with an experienced professional.
Can a UK Company have a Foreign Bank Account?
Yes, a UK limited company for non-residents can have a foreign bank account.
You do need a bank account for your UK company. However, this doesn’t need to be a bank account with a bank in the UK. You can also have a UK bank account with a foreign bank.
However, most of the times, it won’t be so easy to open a bank account for your UK company abroad because of bank policies. Most banks only open accounts for businesses in their jurisdiction. One exemption might be opening an account with a fintech.
Does a UK Company Need a Resident Director?
No, a UK company doesn’t need a resident director.
You can be a director yourself if you set up a UK Limited Company for non-residents. You will need to share your service address and residential address as a director though.
Furthermore, you should be aware of some attention points from a tax perspective.
First of all, if you take out a salary as a director, you should normally pay income tax in the United Kingdom on this income. Furthermore, also social contributions might be due. You need to align this with the tax regulations in your country of tax residency.
The most important attention point from a tax perspective is on a company level. By default a company set up in the UK will pay corporate tax in the UK. However, if you continuously run your company from abroad, this can trigger tax consequences abroad.
If you are a tax resident from another country and run the UK Limited company for non-residents from there, the local authorities could ask. you to start paying corporate tax there. The reason is that the value of the company is actually created from within their territory and not from the UK. This is called a permanent establishment.
What are the Tax Obligations of a Non-Resident Owning a UK Company?
The tax obligations of a non-resident owning a UK limited company for non-residents are twofold.
First of all, the UK limited company for non-residents should meet the tax compliance requirements in the UK. So, it will amongst other need to keep proper financial statements and file a corporate tax return in the United Kingdom.
Yet, as mentioned before, if you don’t watch out, you could also trigger tax consequences on the level of your UK limited abroad. This is a situation you want to avoid as this will make things rather complicated.
At the same time, you might also have tax obligations on a personal level if you are the owner or director of a UK company. This will most likely be the case if you receive any income from the company. This can be a salary as a director or dividends as the shareholder.
These might trigger tax obligations in the UK but also in the country where you have your personal tax residency so you need to analyze the double tax treaty to assess the consequences.
Always consult with a specialist in order to fully understand all of your tax obligations. Failing to do so could result in penalties and even double taxation.
Can a UK Company Help Me Get a Visa?
Yes, your UK company can help you get a visa for the United Kingdom. However, this isn’t as easy as in some other countries.
After setting up your company, you need to apply for a sponsor license. In order to obtain such license, you need to meet certain requirements and provide some documentation. Your business will need to have genuine business interests in the UK and you should do actual work for your company.
Next, your company can use their sponsor license to hire you as an employee. With the sponsor license, you can apply for a skilled worker visa. In order to apply, you will need to meet certain criteria.
For all those reasons, it is possible to obtain a visa through your UK company but it’s far from easy.
