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Deferring tax

Deferring tax


I'm considering working as a contractor in the UK through a limited company. If I take a salary below the 40% taxrate threshold in the current tax year, then move abroad can I remove the rest of the money tax free (after paying corporation tax on the retained earnings) the following tax year (assuming I am in another country)?




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29th Oct 2011 09:40

Possibly, but there are issues

I am assuming that when you say you are a contractor in the UK through a limited company, that you are an owner manager of said company (100% shareholder and sole director)?

If so, then after leaving the UK, you would be able to issue a dividend out of this company, without being subject to additional UK tax. However, the bigger question would be what would the effect of this dividend be to the country that you are moving to. Would it in fact be taxable income?

Another potential issue is that you would need to continue operating your company from your new foreign residence (you haven't said where), until such point as you have extracted all of the profits at which point you would either leave the company dormant or alternately close the company.

This might put you in conflict with your new countries Foreign Controller Companies laws (if they have any).

The dividend extraction route was how Tina Green (Monaco resident wife of Phillip Green) managed to receive a £1.3-billion payout from Arcadia in 2005 without being subject to further UK or Monaco taxes.

There is a deemed tax credit with the dividend that would be claimable to reduce any UK taxes paid, however it is not refundable in the UK and is not recognized as 'tax paid' by the vast majority of foreign fiscal authorities.

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06th Nov 2011 00:30

Thank you that's very kind advice :-)

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