Becoming a UK tax resident: what you need to know

As an international business owner or finance director operating in the UK, one of the most important decisions you’ll need to make is when your company becomes a UK tax resident. Knowing when this happens can have a major impact on how much tax your business pays and what regulations it needs to comply with.

In this blog, we cover what you need to know about becoming a UK tax resident.

When does your company become a UK tax resident?

Companies are considered to be UK tax residents (or have an obligation to UK taxation) if they meet any of the following criteria:

  • The company is incorporated in the UK;
  • The company has its central management and control in the UK;
  • The company is carrying on business activities in the UK and those activities are managed from within the country;
  • The company has its place of effective management in the UK. This means that where the key decisions about managing and running the company are made, even though meetings may take place outside of the UK.

If your company meets one or more of these criteria, then it will be considered to be a UK tax resident and will be subject to corporation tax at 25%.

However, if your company does not meet any of these criteria, then it will not be considered a UK tax resident. It will instead only pay tax on profits generated in the UK through a permanent establishment. This could mean lower taxes for your business depending on its structure and operations.

Owning shares in a non-UK company

It’s also important to note that if you are an individual who owns shares in a non-UK company, then you may still be liable for taxes on those shares as an individual. In this case, you would need to declare any income or gains related to those shares as part of your personal tax return. This may include capital gains tax, income tax, or both.

Get international tax planning support

Understanding when your company becomes a UK tax resident is essential for ensuring that your business complies with all necessary regulations and pays its fair share of taxes.

To avoid any unexpected surprises down the line, it’s important that international businesses seek professional advice from an international tax adviser who can help them determine their exact situation with regard to taxation requirements under HMRC regulations.

By doing so, businesses can ensure that they remain compliant while minimising their overall taxation burden.

How can we help

Our international tax advisers have a wealth of experience in assisting multinational companies with UK tax requirements. If you have any further enquiries, please get in touch with a member of our International Services team on 01293 227670.