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Personal Tax as non-UK-resident for UK company

I can't figure out my personal income tax on dividends from a UK company as a non-resident.

Didn't find your answer?

Hi

I'd love some help to figure this out:
- I'm a non-UK-resident (Australian resident)
- I'm the director of a UK-based company (e-commerce brand based in the UK and selling in the UK)
- I need to pay myself on some of the profits from my UK company (=dividends?)

I am unclear what income tax % I'd have to pay between UK taxation and Australian taxation.

Replies (31)

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By Wanderer
19th Sep 2020 08:25

phb71 wrote:
Personal Tax as non-UK-resident for UK company
I can't figure out my personal income tax on dividends from a UK company as a non-resident.

Hi

I'd love some help to figure this out:
- I'm a non-UK-resident (Australian resident)
- I'm the director of a UK-based company (e-commerce brand based in the UK and selling in the UK)
- I need to pay myself on some of the profits from my UK company (=dividends?)

I am unclear what income tax % I'd have to pay between UK taxation and Australian taxation.

What country are you a national of?
What other UK income do you have?
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Replying to Wanderer:
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By phb71
19th Sep 2020 08:49

I'm French but I live in Australia - used to be a UK resident (several years ago) and moved to Australia.

No other UK income.

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By Tax Dragon
19th Sep 2020 10:24

It sounds to me as if the company might also now be resident in Australia and [(ought to have been) treated as (emigrating and thereafter - and now - as)] not resident in the UK.

Have I heard right?

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Replying to Tax Dragon:
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By phb71
19th Sep 2020 11:37

No the company is a UK-based entity, with a UK address and business done in the UK.

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Replying to phb71:
By SteveHa
29th Sep 2020 11:45

That's not the be all and end all of company residency. Where is management and control located?

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By jonharris999
19th Sep 2020 15:18

Like most of the UK's DTTs, that with Australia has an overarching framework concerning business activity, and then has different provisions for income from employment (including directorships) and dividends, which are two distinct kinds of income taxed differently even for residents.

You need bespoke advice.

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Replying to jonharris999:
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By Tax Dragon
19th Sep 2020 22:43

And, personally, I think it would be prudent for some of that bespoke advice to be taken in relation to Australian corporate residence [I'm fairly sure the existence of a UK address doesn't make the list of even the unimportant tests] and Australian taxes.

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Replying to Tax Dragon:
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By phb71
20th Sep 2020 00:21

What do you mean by 'Australian corporate residence' and 'the list of even the unimportant test'?

To my understanding, I am one entity and the UK business is a separate entity. The main question is how dividends from that business to me is taxed.

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Replying to jonharris999:
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By phb71
20th Sep 2020 00:20

Apologies for my lack of knowledge - what's DTT? Are you saying I need to ask an Australian accountant?

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Replying to phb71:
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By Paul Crowley
20th Sep 2020 02:50

Double Taxation Treaty (DTT)

Get advice from an expert.
You are probably managing the company from Australia

https://assets.publishing.service.gov.uk/government/uploads/system/uploa...

Article 4 onwards

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Replying to Paul Crowley:
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By phb71
20th Sep 2020 03:30

Good link, thank you.

I did check this before with an accountant and I would be receiving dividends from a foreign business (UK) but it's unclear what's the rate applied and if it's in Australia only or UK as well.

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Replying to phb71:
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By Tax Dragon
20th Sep 2020 08:27

phb71 wrote:

Are you saying I need to ask an Australian accountant?

Yes. (One that deals with other companies registered outside Australia might be a good choice.)

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By Paul Crowley
20th Sep 2020 03:31

You need a tax expert, not an accountant

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By phb71
20th Sep 2020 03:44

Sure - I was just hoping for some answers from this thread even if not 100% sure.

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Replying to phb71:
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By Paul Crowley
20th Sep 2020 04:22

You seem to be focused only on the dividend.
That is a trivial issue that any accountant in Australia can answer based on Australian tax rules.

The big issue is the tax regime of the company
Are you the ONLY director?

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Replying to Paul Crowley:
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By phb71
20th Sep 2020 05:57

Yes I am the only director and got an accountant who looks after it for the UK corporation tax and else.

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Replying to phb71:
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By jonharris999
20th Sep 2020 07:31

phb71 wrote:

Sure - I was just hoping for some answers from this thread even if not 100% sure.

I completely understand why this looks like a simple or marginal point from your perspective, something on which you could get a simple yes or no from this forum.

What I and several others are driving at here is our concern that you have a false premise. This is not a simple or marginal point and it really needed to be considered before you put your structures in place, rather than as a kind-of afterthought (I don't mean to sound cruel but that's a bit what it sounds like from what you have told us?)

You will save money, time and anxiety if you set out your detailed situation to an expert on the two countries and take their advice on the best way to set up (or alter) the structure and distribute profits.

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Replying to jonharris999:
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By phb71
20th Sep 2020 08:10

Can you explain what you mean by false premise? It seems like you're highlighting a different issue that I'm not seeing.

From an expert perspective, what does that person look like? I don't think it's that easy to find a one-man UK-Australian-tax-accountant-legal expert.

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Replying to jonharris999:
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By phb71
20th Sep 2020 08:11

Can you explain what you mean by false premise? It seems like you're highlighting a different issue that I'm not seeing.

From an expert perspective, what does that person look like? I don't think it's that easy to find a one-man UK-Australian-tax-accountant-legal expert.

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Replying to phb71:
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By jonharris999
20th Sep 2020 13:10

I mean your premise that you're already all over your company's tax arrangements in the care of your existing accountant, if only you could resolve this somehow-separate-and-other question about how your dividends are taxed. It's not separate-and-other. It's completely fundamental to your strategy and I don't get why your accountant isn't (apparently) interested in it.

If you want to avoid the fees of a big international firm, which is wise, you could shout out here for an Aus specialist, and perhaps there is a similar forum in Aus where you could ask for a UK specialist? There must be some.

But also it doesn't sound so complicated that your UK accountant couldn't work it out in conversation with an Aus accountant? At the very least that's a place to start, and then if it really is impossible for them to advise they will say so.

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Replying to jonharris999:
Caroline
By accountantccole
21st Sep 2020 11:52

A bit worrying that the UK accountant doesn't seem to have raised the Aus branch issue!

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Replying to accountantccole:
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By Tax Dragon
21st Sep 2020 14:56

There's only a branch in Australia if the company is doing business in Australia.

If the company is doing business in Australia, then I am confident that it is resident there under Australia's tax rules. So I don't think "the Aus branch issue" is an issue (and the more interesting question may be whether there is a branch in the UK).

I believe that the meaning of "doing business in Australia" has been considered and clarified quite recently, from an Australian perspective (which is the one that matters here).

The OP's first port of call should be to an Australian accountant. If my last paragraph above is correct, I should think it has been a topic of recent training/update courses for/discussion amongst accountants in Australia, and the OP might find an up-to-date one more readily than s/he imagined.

Please note the if. I am often not correct on matters like this.

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Replying to phb71:
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By Paul Crowley
20th Sep 2020 15:55

Your company may be paying tax in the wrong country.
That makes your fixation on the simple dividend issue a trivial matter.

Your UK person should be able to tell you that UK dividends do not come with a tax credit

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Replying to Paul Crowley:
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By Wanderer
21st Sep 2020 12:07

Except under s399 ITTOIA 2005 when they effectively do, in certain circumstances!

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Replying to phb71:
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By Paul Crowley
21st Sep 2020 11:57

Australia has lots
But you may need a big firm to find them.
Immigrants from UK are not rare

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By phb71
22nd Sep 2020 09:39

OK thanks for the advices everyone. I've spoken with both a UK tax expert and an Australian one as well:

The business is a UK entity conducting business in the UK, not Australia, and though should be and is paying corporation tax in the UK.

The director (myself) is an Australian resident and can pay himself dividends taxed under Australian taxation law (normal income tax) and is not subject to UK dividend tax, being a non-UK resident.

So according to them, it's pretty straightforward.

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Replying to phb71:
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By Wanderer
22nd Sep 2020 10:23

.

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Replying to phb71:
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By Tax Dragon
22nd Sep 2020 10:46

You've done well. Two days ago, you were not thinking it would be that easy to find a one-man UK-Australian-tax-accountant-legal expert. In the space of those two days, you've not only spoken with both a UK tax expert and an Australian one as well, but you've received their considered advices.

I wonder how you both found them and tested their expertise, not least because you've not found anyone contributing to this thread saying they agree with them.

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Replying to Tax Dragon:
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By phb71
29th Sep 2020 11:02

I guess I did. What is surprising is that I keep getting the advice on this entire thread to seek outside expertise without getting any specific answer. Now that I did, you seem to challenge the advice I've received. How ironic!

No need to provide additional input. I've received the advice I need, thanks

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Replying to phb71:
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By Matrix
22nd Sep 2020 13:27

What facts did you give the UK tax expert for them to conclude the company is UK resident? Did you tell them that the sole Director is managing and controlling the company from Australia? Although any decent adviser should ask the right questions so not necessarily your fault.

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By SteveHa
29th Sep 2020 11:49

Wish I'd read all the replies before I posted my first one, but I agree with just about everyone that you probably have the residence all wrong in your head (and the UK accountant should have picked up on that - shame on them).

I do also agree that you need expert bespoke advice, not least to unwind things (I've unwound corporate residency done wrong before - it's neither pleasant nor easy, and almost certainly not cheap).

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