Client leaving UK

dyzio

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

reader

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.

dyzio

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

reader

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'