UK director remote working in Dubai – tax

UK Company director remote working from Dubai, understanding tax liability.

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Hello,

I am a UK national and a consultant living in England providing design services through my own Ltd company (company registered in UK since 2011, vat registered, 1 person company, I’m the director). I have been offered a fully remote outside IR35 contract that will be executed by me via my company, beginning April 2024. I was thinking of using the digital nomad visas offered by tax free countries esp. Dubai, for maybe upto 2 FY. If I were to move to Dubai, I would have no ties with the UK except for my company.

I wanted to understand the following:

1.  Will I be non-resident in UK for purpose of taxation, given that I will have no family/home ties with UK, be in UK for less than 30 days; however, all the work I will be doing from Dubai (min 40 hrs/week), will be for my UK company, which in turn is working for a UK client. Does my being the company director change anything, like number of days for UK ties? What is the number of days allowed in UK to be non-resident, as a company director? Is it still 16 days for automatic ties test or reduces to 0?  What do I have to do be non-resident as a company director of a UK company working for my company?

2.  If I’m classed as non-resident, will the dividends/ salary drawn by me from my company be taxable in UK? If no, then do I need to declare them on my self-assessment?

3.  What happens to NI?  Employers NI has to be paid by my company?

4. So far I have understood that upon leaving I will need to complete a P85 form and upon becoming a resident of Dubai apply for a NT tax code. Is that correct? Anything else I need to do?

5. I have a flat that I will rent out, rental income will be filed in my self-assessment & taxed in UK. My company will pay corporation tax, vat as usual. Correct?

6. Income from stocks (companies in USA, EU, UK etc) held in my UK demat account: dividends/Capital gains as well as any UK interest income will also not be taxable in UK? If no, then do I need to declare them on my self-assessment?

7. I have accounts in India (I'm born in India & I think domiciled in India), Income from stocks (companies in India) held in my India demat account: dividends/Capital gains as well as any interest income earned in India will also not be taxable in UK? If no, then do I need to declare them on my self-assessment?

8.  Does anything change if I’m back in 2 FY? HMRC website, talks about temporary non-residents, if back in less than 5 FY. Would that mean that tax on salary/dividends from my UK company would have to be paid before returning? What about other income heads: stocks in UK demat account? I assume that foreign income i.e. earned in India would still be exempt?

I have tried to get information from two accountants but have received conflicting advice. According to my accountant, I will be non-resident & hence except rental income in UK, everything else is outside UK tax. However, a colleague in similar position has been advised by his accountant, that the salary/dividend from my UK company would be taxable in UK, as the work is done through a UK company & as I’m the director of the company, even one day in the UK puts me in UK tax range, he wasn’t sure what happens if 0 days are spent in UK!

I would be very grateful, if someone could provide a definitive answer to this, as I’m sure there must be many in my situation & there is confusing / conflicting advice available. 

Thanking you for reading through a rather long question.

Replies (8)

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By Alfietheaccountant
12th Mar 2024 20:27

Unfortunately you are unlikely to receive a (decent) response to this on an internet forum - you need to find a proper tax adviser to provide you with proper written advice specific to your circumstance - have you any reason to doubt the advice you have taken from a presumably qualified individual/firm? Why would you believe second hand information from a friend over a presumably qualified professional? Try searching on the CIOT website for a member if you want a second opinion but be prepared to pay a decent fee for advice like this specific to your circumstances.

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Replying to Alfietheaccountant:
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By AB80
21st Mar 2024 20:51

thanks for the advice. The reason to post here was to check whether I need more specialized advice than my company accountant offered..looks like i do. ps: advice was not from a friend but his company account - separate company from mine.

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By Matrix
12th Mar 2024 20:50

Try Jeri Williams as she has set up a tax advisory business in Dubai.

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Replying to Matrix:
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By AB80
21st Mar 2024 20:52

thanks. will keep the name in mind.

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By FactChecker
12th Mar 2024 21:07

Well done ... you managed to ask fewer (just) than 20 questions - although many are multi-part and most will lead to further questions!

The only true, if unhelpful, response as you must realise is that you need professional advice (properly obtained and backed by indemnity) to tackle any one, relatively minor, question from that long list ... and the wholesale changes proposed are sufficiently complicated that anyone who says they can answer with a simple Yes or No is not telling you the truth.

One small hint: aside of anything else (and there's a lot of 'else' to uncover), you may find that timing for tax 'efficiency' doesn't easily fit with timing of project demands.

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Replying to FactChecker:
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By kim.shaw-and-co.com
13th Mar 2024 03:35

FactChecker wrote:

Well done ... you managed to ask fewer (just) than 20 questions - although many are multi-part and most will lead to further questions!

The only true, if unhelpful, response as you must realise is that you need professional advice (properly obtained and backed by indemnity) to tackle any one, relatively minor, question from that long list ... and the wholesale changes proposed are sufficiently complicated that anyone who says they can answer with a simple Yes or No is not telling you the truth.

One small hint: aside of anything else (and there's a lot of 'else' to uncover), you may find that timing for tax 'efficiency' doesn't easily fit with timing of project demands.

Sound advice.

I also suggest that the OP also takes into account the difference between tax deductible or deducted under PAYE (which amounts to no more than a 'payment on account' towards a final liability for a tax year and can often exceed that liability in the case of outbounds who perform more than incidental duties in the UK for short periods) and a final liability to income tax.

Any final liability is usually established under Self Assessment in cases as complex as this appears to be.... often after comprehensive Compliance Checks have been carried out by HMRC.

As a matter of general principle, a UK company (assuming it remains a resident employer) is obliged to deduct PAYE from the salaried earnings of a non-resident employee who performs non-incidental duties of their employment in the UK even for a single day in a tax year, unless their employer holds a s690 direction from HMRC limiting the percentage of earnings that are treated as PAYE income. If there is any work at all performed in the UK by that employee the employer cannot apply a NT tax code.

I also suggest that before looking for answers to that are readily available from HMRC's Guidance in an accountancy forum the OP 'has a google'. For example in the context of National Insurance here : https://www.gov.uk/national-insurance-if-you-go-abroad

For a comprehensive reply tailored to the OP's particular circumstances with adequate fact find, the OP might well budget a realistic fee well into the four figures (if not five depending on the extent to which specific advice is sought in relation to relevant company contracts or company residence aspects), along with the hefty compliance costs of establishing and evidencing residence under the SRT and handling a resumption of UK residence after a short period of non-residence.

I do not know who the OP's accountant is (or that of his colleague) but expecting to hear advice from average high street accountants in respect of the general questions posed by two different individuals (probably asking slightly different questions of their respective advisors) is likely "expecting too much".

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Replying to kim.shaw-and-co.com:
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By AB80
21st Mar 2024 20:57

thanks. The reason to post here was to check whether I need more specialized advice than my company accountant offered..looks like I do. he was so confident that i really dint think much of this, until a colleague in a similar position reported that his company accountant had a different view & honestly i dint think the taxman would let me off this easy. Now we are both trying to get better advice. the fees that I have been quoted by some solicitor firms / specializing in expat tax..found on internet/ ciot...are very high..not sure I will be saving much tax after I pay all that!

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Replying to FactChecker:
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By AB80
21st Mar 2024 20:53

thanks. yeah Ive asked a lot of questions! The reason to post here was to check whether I need more specialized advice than my company accountant offered..looks like I do.

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