UK company tax when the owner lives abroad
The rates
| Yearly profit | Corporation tax |
|---|---|
| Up to £50,000 | 19% |
| £50,000 to £250,000 | 25%, reduced by marginal relief |
| Above £250,000 | 25% |
A worked example
A design agency invoices £60,000 in a year. It spends £25,000 on freelancers, software, the owner's salary and accounting. Its profit is £35,000, so the corporation tax is 19% of £35,000, which is £6,650. That is about 11% of what it invoiced.
Why living abroad does not remove the tax
As a general rule, a company incorporated in the UK is UK tax resident, so it pays corporation tax on its profit even if the owner and the clients are outside the UK. Anyone who promises a "tax-free UK company" is leaving this out.
What lowers the profit
- Real business expenses: freelancers, software, advertising, hosting, equipment.
- A salary the company pays you. Salary for work you do outside the UK is usually not taxed in the UK, but confirm your own case with the accountant.
- Professional fees, including formation and accounting.
Dividends and your personal tax
After corporation tax, the company can pay you the rest as dividends. The UK does not withhold tax on dividends. What you owe personally depends on the country where you are tax resident, so ask an accountant there.
VAT is separate
VAT registration becomes compulsory when UK taxable sales pass £90,000 in 12 months. Many companies that sell services to clients outside the UK charge no UK VAT, but the rule depends on what you sell and where the client is. Ask before you invoice UK customers.
What must be filed every year
- Annual accounts to Companies House, within 9 months of the year end.
- The corporation tax return to HMRC, within 12 months of the year end. The tax itself is due 9 months and 1 day after the year end.
- The confirmation statement, once a year (£50).
All three are required even if the company earned nothing. Every Tachkeel package includes them.
We form your UK company, apply for your payment account and handle the accounting. Packages from $1,890.
Talk to us on WhatsAppSee packages and pricesCommon questions
Does my UK company pay tax if it made no profit?
No corporation tax is due without profit, but the accounts, the tax return and the confirmation statement must still be filed on time.
Is the tax on revenue or on profit?
On profit: revenue minus allowable business expenses.
Can I avoid UK tax because I live in Lebanon?
As a general rule, no. A company incorporated in the UK pays UK corporation tax on its profit.
Do I pay UK tax on dividends I receive abroad?
The UK does not withhold tax on dividends. Your personal tax depends on where you are tax resident.
More guides
Sources: Corporation Tax rates and allowances (GOV.UK) · Companies House fees (GOV.UK)