Non-resident directors of UK companies frequently asked questions

In today’s global economy, it’s not unusual for UK companies to have non-UK resident directors. Whether this is to utilise additional experience, give the company a wider pool of director level talent or because the company is part of a larger overseas group. For tax purposes, Non-Resident Director’s or NRD’s as they are often referred to, should understand the things they need to do to satisfy UK tax laws. Here at dns, we’re specialists in non-resident directors and the tax implications of being and NRD. In this blog we aim to answer the most frequently asked questions from NRD’s.

Can a UK company have a non-resident director?

We’re often asked ‘Can you UK company director be based overseas’ and the simple answer to this question is yes. There is no legal requirement for a director of a UK company to be a British National, reside in the UK, base themselves here or make visits here at any time.

Who can be a director of a UK company?

Every company needs at least one director who is a ‘natural person’ – this refers to it needing to be an individual rather than a ‘legal person’ which can be a limited company or corporate body.

To be classified as a ‘natural person’ and able to be a company director you must:

• be at least 16 years old
• not be an undischarged bankrupt
• not be a disqualified director
• not be an auditor of the company

Can NRD’s be a shareholder, company secretary or Person with Significant Control in a UK company?

Yes, a non-resident director can also be a shareholder, company secretary or a Person with Significant Control.

Do non-resident directors need to file a tax return?

Even if you’re a non-resident director, you may still be required to file a tax return (even if you owe no tax). You won’t be required to file a tax return if you have no UK duties and receive no UK source income.

You will be required to file a UK tax return as a non-resident director if you have any of the following:

• Any UK workdays (even just 1 day)
• A Directors fee
• Reimbursed Expenses
• UK salary

I earn less than the UK personal allowance as a non-resident director, so no tax is due, will I still have to file a tax return?

The UK Personal Allowance continues remains available for EU nationals, meaning that you can earn up to £12,570 tax-free as a non-resident director. However, you’ll still need to file a tax return even if there is no tax due.

Do HMRC check on non-resident directors or companies with NRD’s?

HMRC regularly do compliance checks on UK companies and expect relevant non-resident directors to have submitted a tax return where necessary.

Does the company of an NRD need to run PAYE?

If a non-resident director is working wholly outside the UK, has not been resident in the UK before, and does not perform any duties in the UK, it is unlikely that there will be any significant UK PAYE obligations.

However, if the non-resident director is a director of entities in multiple countries, but only has one salary. HMRC will assume that a proportion of the directors salary relates to work undertaken on behalf of the UK company.

The UK company should in this case, review the whole remuneration package of the non-resident director, including expenses, bonus, and benefits as well as salary.

When does a non-resident director have to file a tax return?

UK tax returns must be submitted by 31 January following the tax year-end.

The UK’s tax compliance requirement for NRD’s can be complex, depending on your remuneration package. It’s wise to seek expert advice to ensure you are compliant with UK tax law as a non-resident UK director.

At dns we have a specialist tax team that can help to determine your UK tax status and answer any non-resident director tax questions you have. Please contact us or email enquiry@dnsaccountants.co.uk or call us on 0333 0603321.

Also See: Non Resident Bank Account In UK

About the author

Sumit Agarwal
Sumit Agarwal (ACMA ACA India), the Managing partner of dns accountants is a highly respected accountant with expertise in helping owner-managed businesses.