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Client leaving UK

dyziodyzio New MemberRegistered, MAAT, AAT Licensed Accountant Posts: 35
Hello, I would love some help with this. My client told me about a week ago that she is leaving UK as she landed a permanent job in France. She was employed through her limited company (year-end in March). She is starting work in France on the 22nd of March. For the tax year 2017-2018 she received a salary of £8k and div of £30k. Her limited company is not trading any more but she still has about £30k in business bank account. Please advise what would be the most tax efficient way for her to take the money out. Declare as dividends at year-end (31st Mar 2018)? Could we declared dividend in new tax year (April), after she left the UK? Am I understanding correctly she will no longer be a resident in UK but will have to pay tax on UK income, and will have to declare this income to French authorities?
Thanks.
Agata

Comments

  • readerreader Experienced Mentor MAAT, AAT Licensed Accountant Posts: 1,042
    If she is going to be non-resident for at least 5 complete tax years after the tax year of departure the most tax efficient way to take the money out of the company would be a dividend on or after 6 April 2018.

    Otherwise it might be worth processing a salary/bonus for £6k this month which should leave reserves of £24k and then she can close the company and take the remaining £24k taxed at 10% via entrepreneur's relief.

    I'm assuming the £30k is reserves/accumulated profits, i.e. she has paid all her corporation tax, VAT, and any other company liabilities.
  • dyziodyzio New Member Registered, MAAT, AAT Licensed Accountant Posts: 35
    Hi Reader, thank you for replying. Yes, £30k is after CT and all other liabilities. I am not sure if she will be a non-resident for at least 5 years, and she isn't sure either. This is the first time I have encountered it, so I feel a little out of my depth. Having said that, I would love to learn as much as I can about it, so any help and explanation is greatly appreciated.
    I understand we need to fill in her self assessment tax return (for 2017-2018) and let HMRC know she is leaving the country today (20th of March). If dividends are declared and paid in tax year 2018-2019, we still need to fill in UK tax return and show dividend income. This will not have any tax liability, as dividend income will come with the credit (7.5%) - is that correct?

    Also, please advise what would happen if the client did come back to UK in less than 5 years. Will this dividend income be taxed in the tax year she arrives back to UK?

    Thanks.
    Agata
  • readerreader Experienced Mentor MAAT, AAT Licensed Accountant Posts: 1,042
    The dividends would not be tax if she is a non-resident as it would be 'disregarded income' or 'excluded income'.

    However she would be taxed in the year she arrives back if it is within 5 years as she would only be 'temporarily non resident'
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