Moving abroad does not mean you have to close your UK limited company. You can continue owning it, serving the same customers and receiving a share of its profits while living elsewhere.
What can change is the tax on the money you take out, particularly if you receive dividends or intend to sell the company.
I often speak to business owners who have worked out where they want to live and how the company will operate, but have not considered how the move will affect their personal tax position.
For owners who take most of their income through dividends, the timing can make a substantial difference to their UK tax liability. The same applies to those considering selling their company while living overseas.
There are also separate considerations for the company itself, which may continue to have UK tax obligations regardless of where its shareholders live. Where an owner-director manages the business from abroad, the company may also face overseas corporate tax residence, permanent establishment or reporting questions. The owner's personal residence status does not determine the company's tax position.
Establishing non-residence under the statutory residence test
UK residence is determined for each tax year, from 6 April to 5 April, under the statutory residence test. For entrepreneurs continuing to work overseas, the third automatic overseas test is particularly relevant.
An individual is non-UK resident for the whole tax year under this test if they meet all four conditions:
Overseas working hours: work at least 35 hours overseas, on average, per week;
No significant breaks: avoid a gap of 31 days without more than three hours of overseas work or qualifying annual, sick or parenting leave;
UK days: present in the UK at midnight on no more than 90 days;
UK workdays: exercise no more than 30 workdays in the UK.
The test applies to employees and the self-employed. Overseas working hours are calculated using HMRC's specific formula, rather than requiring exactly 35 hours in every individual week.
Meeting the third automatic overseas test can establish non-residence for the whole tax year despite continuing UK ties or access to a UK home. The full statutory test must still be applied to the individual circumstances, including any family residence arrangements.
HMRC explains the requirements in its guidance on the third automatic overseas test.
A founder leaving partway through a tax year may qualify for case 1 split-year treatment providing that they satisfy overseas working conditions after departure and meet the third automatic overseas test for the following tax year.
For example, a Case 1 split-year period beginning on 1 October 2026 has permitted limits of 45 UK days and 15 UK workdays (of more than three hours) until 5 April 2027, followed by the full-year overseas test for 2027/28. HMRC split-year limits These limits are only part of the conditions: the individual must also meet the required overseas-hours and no-significant-break rules, have been UK resident in the preceding year and satisfy the third automatic overseas test in the following tax year.
Dividends and disregarded income
For an individual who is non-resident for an entire UK tax year, dividends from UK companies fall within the disregarded income rules.
Section 811 of the Income Tax Act 2007 limits the UK income tax liability by reference to tax deducted from disregarded income and tax on other UK income calculated without personal allowances.
Ordinary UK company dividends are generally paid without UK withholding tax. In a full tax year of non-residence, the disregarded-income rules may mean no additional UK personal income tax is due, depending on the individual's other income and circumstances; later temporary non-residence rules may also matter.
For example, an £80,000 dividend paid during a full year of non-residence may result in no additional UK personal income tax under the disregarded-income rules. The result is not automatic: other UK income, a later return triggering temporary non-residence rules, and taxation in the new country of residence must also be considered.
The company must have sufficient distributable profits, and its corporation tax position is separate from the shareholder's personal tax liability.
It is important to note that the departure tax year is different.
The disregarded-income limitation does not generally apply to the overseas part of a split year in the same way as to a full non-resident tax year. An owner who starts working in Portugal in October 2026 and takes a UK dividend in December may therefore remain subject to the normal UK dividend tax calculation. Timing is relevant, but the final result also depends on the statutory residence test and the owner's full tax position.
Capital gains on investments and company shares
Non-residents are not ordinarily charged UK capital gains tax on disposals of standard company shares solely because the company is UK-based. However, UK land and certain property-rich shareholdings can remain chargeable; the shareholding, acquisition history, any UK trading assets and temporary non-residence rules must also be considered.
Certain assets used in a UK trade carried on through a branch or agency can also remain chargeable.
Consider a founder who leaves the UK, becomes non-resident and sells shares in their UK technology company two years later, making a £2 million gain.
If none of the applicable exceptions applies, the £2 million gain may fall outside UK capital gains tax at the point of sale. A subsequent return to UK residence and tax in the country of residence could alter the overall result.
Temporary non-residence and the five-year rule
The temporary non-residence rules can bring certain income and gains arising while overseas back into UK taxation on return. Broadly, this can apply where a person had sole UK residence for at least four of the seven tax years before leaving and their period without sole UK residence lasts five years or less. HMRC temporary non-residence rules Not every dividend or disposal is caught: the precise statutory conditions, ownership and asset history matter.
Suppose the founder receives a £150,000 dividend and realises a £2 million gain on shares acquired before moving abroad.
If they return after three years and the relevant temporary non-residence provisions apply, some or all of the dividend and gain may be treated as arising in the tax year of return. The £150,000 dividend and £2 million gain should not be assumed to become automatically taxable in full. Notably, for individuals returning to UK residence on or after 6 April 2026, HMRC states that the previous exclusion for close-company dividends attributable to trading profits arising during the period overseas no longer applies. HMRC close-company distributions guidance
Taxation in your new country of residence
The important takeaway is that income and gains may initially fall outside a UK charge yet still create a UK tax liability on return if the relevant temporary non-residence conditions are met.
Dividends and capital gains received while living overseas may also be taxable in your new country of residence, so it is important to consider the tax position in both countries before making any payments or disposals.
If temporary non-residence rules are triggered upon a return to the UK, relief for tax paid abroad may be available depending on the type of income or gain, applicable legislation and the relevant double taxation agreement. The amount and mechanism of any credit require individual review.
Summary
For entrepreneurs, the important dates are when non-residence begins, when dividends and gains arise, and when someone returns.
Checking the third automatic overseas test, recording UK workdays, reviewing planned transactions and considering the destination country's tax rules before departure can avoid an unexpected liability later.
Where substantial dividends or company sales are being considered, the possibility of returning within five years should form part of the original planning.
This article is general information, not individual tax, legal or financial advice. Outcomes depend on the tax year, the individual's circumstances and the rules of both relevant countries; specialist advice should be obtained before moving, taking dividends or disposing of company shares.
About the Author
Emma McDermott ATT is the founder of Global Tax Consulting, a tax consultancy specialising in UK tax advice for expats and digital nomads. She previously worked at Deloitte and advises on SRT UK tax residence and the taxation of income and gains when moving overseas.
For those planning a move, her leaving the UK tax guide provides further information on the residence rules and tax obligations after departure. Her leaving the UK tax calculator enables you to compare your estimated UK tax liability as a resident and non-resident.