{"id":783,"date":"2022-07-05T08:05:08","date_gmt":"2022-07-05T08:05:08","guid":{"rendered":"https:\/\/taxtribe.co.uk\/?p=783"},"modified":"2022-07-05T08:05:08","modified_gmt":"2022-07-05T08:05:08","slug":"three-tax-questions-for-non-resident-directors","status":"publish","type":"post","link":"https:\/\/taxtribe.co.uk\/three-tax-questions-for-non-resident-directors\/","title":{"rendered":"Three Tax Questions for Non-Resident Directors"},"content":{"rendered":"

In our online age, you don\u2019t have to live in the UK to work for a UK company. Plenty of people take the opportunity to live in one country while being employed in another. The same applies to company directors. It\u2019s perfectly legal for a company based in the UK to have a director who is based abroad, even full-time. And this kind of cross-border appointment can be a great way to ensure that your company has the best and most talented people on board \u2013 regardless of location.<\/span><\/p>\n

However, it\u2019s also true that non-compliance is a serious risk when it comes to non-resident directorships. The penalties for this can be severe, so it\u2019s important to make sure you\u2019re in good standing with HMRC. Here are three key questions to ask for non-resident directors and the companies that appoint them.<\/span><\/p>\n

How non-resident is non-resident?<\/b><\/p>\n

UK-based company directors are paid by PAYE. If your non-resident director lives and works abroad 100% of the time, then this obligation shouldn\u2019t apply \u2013 although it\u2019s still worth checking with your accountant. However, if the director does spend any time working in the UK, then PAYE compliance becomes an issue.<\/span><\/p>\n

Because many UK companies get this wrong, it\u2019s something HMRC look out for when performing compliance checks. The best way to avoid penalties is to take advice and get it right from the start.<\/span><\/p>\n

Is a UK tax return needed?<\/b><\/p>\n

It isn\u2019t just the company that needs to worry about the (non-)residency question. As a rule, an employee or contractor working for a UK company isn\u2019t considered tax resident unless they also spend <\/span>at least 183 days per year<\/span><\/a> in the UK.\u00a0<\/span><\/p>\n

However, the situation is more complicated if you are a company director. If you spend a single day working in the UK, then you may need to file a UK tax return for that year. The same applies if you receive any income with a UK source, including salary, director\u2019s fees, and expenses. Unless the income is already covered by PAYE, you must report it to HMRC \u2013 even if your country of residence has a double taxation agreement with the UK.<\/span><\/p>\n

What about National Insurance?<\/b><\/p>\n

This is a complex question for both director and company. Here, too, the general principle is that individuals are covered by \u2013 and obliged to pay into \u2013 the social welfare system in their country of residence. However, a company director who performs any work in the UK may be deemed liable to pay National Insurance contributions.<\/span><\/p>\n

Whether or not this applies depends on a number of conditions, including whether the director\u2019s country of residence is in the EU. It can also be possible to apply for an exemption depending on the nature and duration of the work.<\/span><\/p>\n

When it comes to appointing a non-resident director for a UK company, these three questions are just the start. The best way to ensure that your company and its director(s) remain compliant with HMRC is to take expert advice before making any decisions. If you\u2019re interested in finding out more, just <\/span>get in touch<\/span><\/a> with our online accounting service for a free, no-obligation quote.<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"

In our online age, you don\u2019t have to live in the UK to work for a UK company. Plenty of people take the opportunity to live in one country while being employed in another. The same applies to company directors. It\u2019s perfectly legal for a company based in the UK to have a director who…<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"rank_math_lock_modified_date":false,"footnotes":""},"categories":[1],"tags":[],"class_list":["post-783","post","type-post","status-publish","format-standard","hentry","category-uncategorized"],"acf":[],"_links":{"self":[{"href":"https:\/\/taxtribe.co.uk\/wp-json\/wp\/v2\/posts\/783"}],"collection":[{"href":"https:\/\/taxtribe.co.uk\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/taxtribe.co.uk\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/taxtribe.co.uk\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/taxtribe.co.uk\/wp-json\/wp\/v2\/comments?post=783"}],"version-history":[{"count":2,"href":"https:\/\/taxtribe.co.uk\/wp-json\/wp\/v2\/posts\/783\/revisions"}],"predecessor-version":[{"id":785,"href":"https:\/\/taxtribe.co.uk\/wp-json\/wp\/v2\/posts\/783\/revisions\/785"}],"wp:attachment":[{"href":"https:\/\/taxtribe.co.uk\/wp-json\/wp\/v2\/media?parent=783"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/taxtribe.co.uk\/wp-json\/wp\/v2\/categories?post=783"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/taxtribe.co.uk\/wp-json\/wp\/v2\/tags?post=783"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}