Are salaries paid from a UK LTD to a non-resident director taxed in the UK?

[ampash]

Dear Experts,

Maybe we could clarify here:

I've found quite conflicting information on the tax liabilities of paying myself as a non-resident director/employee from a UK LTD company that I plan to start.

I would like to form a UK Ltd, and understand the 19-25% corporate tax, but my plan was to take out a salary up to around 100,000 GBP and there really wouldn't be much or any remaining profits subject to corporate tax.

Being also a US citizen, I do need to receive this salary under the FEIE rules of the US, so dividends are not an option, neither is a UK LLP pass-through type of setup.

There would be no UK activity or employees, just selling some digital products from Paraguay, my country of residence. I'm not concerned about the Paraguay side of things.

So: Would my company pay tax on my salary in the UK? (NIC 13.8% thru PAYE) Or just the profits remaining after salary/expenses?

If so, I'm a bit at a loss as to why this structure is so popular, aside from the ease and low cost of setting it up. Am I missing something?

 

[daniels27]

Yes we once also discussed this
https://www.offshorecorptalk.com/th...rom-your-own-company.44724/page-2#post-301208

From HMRC, I would say that you need to file with a Nil Tax code but not pay taxes
https://community.hmrc.gov.uk/customerforums/pt/bf80a7ba-34dd-ee11-a81c-002248c64665
https://community.hmrc.gov.uk/customerforums/payepe/b4f8396b-b1cd-ef11-95f5-6045bd0ad9d8

 

[Xshore]

From HMRC, I would say that you need to file with a Nil Tax code but not pay taxes
https://community.hmrc.gov.uk/customerforums/pt/bf80a7ba-34dd-ee11-a81c-002248c64665
https://community.hmrc.gov.uk/customerforums/payepe/b4f8396b-b1cd-ef11-95f5-6045bd0ad9d8

The first question is from a UK national that is moving from the UK.

From the link inside the 2nd link:
4.6.6 Coding for payroll purposes for non-resident employees who have never been resident in the UK
You may need to provide a code number in the paying system. Code ‘NT’ may be used where a business in the UK (or the UK branch or office of an overseas business) employs someone who’s non-resident, and the employee:

is working wholly outside the UK
has not been resident in the UK before
does not intend to and will not perform any duties in the UK
An FPS is not required and there’s no liability for National Insurance contributions. If the residency position of the employee or the place the duties are performed change so that the employee becomes liable to UK tax, you should immediately stop using code NT and follow the procedure for new employee coming to work from abroad.

 

[Houdini]

Do you have any experience with all of this @Xshore read it like you know what you are posted about there?

 

[DomOCT]

is working wholly outside the UK
has not been resident in the UK before
does not intend to and will not perform any duties in the UK
An FPS is not required and there’s no liability for National Insurance contributions. If the residency position of the employee or the place the duties are performed change so that the employee becomes liable to UK tax, you should immediately stop using code NT and follow the procedure for new employee coming to work from abroad.

Would anything have to be filed in this case or would it simply be enough to have an employment contract and to transfer the salary on a weekly/monthly basis to your personal account? Assuming the salary is market rate

 

[Xshore]

Do you have any experience with all of this @Xshore read it like you know what you are posted about there?

Would anything have to be filed in this case or would it simply be enough to have an employment contract and to transfer the salary on a weekly/monthly basis to your personal account? Assuming the salary is market rate

I've done this for many years, after doing a lot of research and asking several accountants. There are some mixed opinions, some saying that you need to run payroll and use the NT code (and paying no tax and no NI), while others say it's not necessary. I've never been audited so no personal experience on what HMRC would say. But as there is no tax due I assume any penalty would be limited.