The United Kingdom continues to be one of the globe’s most trusted and welcoming places for entrepreneurs to do business. The country’s stable legal system, highly developed international banking and finance infrastructure, and worldwide reputation, offers peace of mind to those who want to start to an international business.
Without even stepping foot in the country, foreign entrepreneurs can create a UK Limited Company (LTD) through a simple online registration system.
One of the first and most important questions business owners ask is:
“If I do not live in the UK, do I still have to pay UK taxes?”
The lack of understanding of legal UK tax obligations, for a non-resident business owner planning to set up a UK LTD, will most certainly lead to hidden costs, risky legal issues, and complex compliance problems.
This is a straightforward article created by Bizstartz describing the tax obligations of non-resident business owners in the UK, such as corporation tax, VAT, and compliance rules, which will enable you to run your business legally.
1. Can Non-Residents Own a UK Limited Company?
Certainly! In fact, the UK permits complete ownership of Limited Companies by individuals from outside the country, without the need for residence in the UK. You can register a company without ever having a UK passport, visiting the UK, or living in the country. This is ideal for:
- E-commerce entrepreneurs targeting the global market
- Freelancers and consultants establishing an international footprint
- Freelancers servicing multiple countries
- Startups trying to gain trust and credibility in the UK
With Bizstartz, non-resident entrepreneurs can register their UK LTD company fully online. This includes:
- Company formation: You can choose your company name, share structure, and directors
- Administer a Registered office address: This is a legal address in the UK for official correspondence
- Facilitating a UK business bank account: This helps with international payment
- Assisting with VAT registration: This becomes pivotal when your UK sales surpass the threshold
- Accounting and tax filing: To ensure compliance
Unlike having company registration anywhere else in the world, a UK Limited Company presence and account gives you credibility and makes global banking and payment processors access and marketplaces like amazon, eBay and Shopify easier.
2. When Are UK Limited Companies Required to Pay Taxes?
One common misconception is that as soon as a company is formed in the UK, UK taxes must also be paid. In reality, this is not the complete picture. The main consideration is where the company is managed and controlled from.
As stated by HMRC (Her Majesty’s Revenue and Customs) guidelines,
- A UK Limited Company is tax resident in the UK if its central management and control (normally the board of directors) is exercised in the UK.
- If your company is managed from outside the UK, it is unlikely that your company will be liable for UK Corporation Tax on worldwide income unless you have UK-source income.
Non-residents will be most impacted by the following.
- If you are a non-resident director and all decisions are made outside the UK, your company is unlikely to be liable for UK tax on worldwide profits.
- Even without an office in the UK, and especially if you are managing contracts with UK clients, your company is likely to have UK-source income, and that income will be taxed in the UK.
- You will likely have to declare the company income in your country of residence as well.
Example:
If a Nepal-based entrepreneur creates a UK LTD, holding global sales, and all board meetings are held in Nepal, the company may not owe UK corporation tax, but the revenue may still need to be declared in Nepal under local tax regulations.
3. Understanding UK Corporation Tax (2025 Rate)
For anyone operating a UK Limited Company, tax corporation is a vital thought. Even non-residents need to understand these rates to adequately organize their finances.
UK Corporation Tax Rates (2025):
| Profit Level | Tax Rate |
| Up to £50,000 | 19% |
| £50,001 – £250,000 | Marginal relief applies |
| Above £250,000 | 25% |
What does this mean for your business?
- New startups will be taxed 19%, so the UK is favorable to new businesses because new companies with profits under £50,000 will be taxed less.
- Companies with profits positioned in the £50,000 to £250,000 range will be taxed named progressively as a result of the marginal remedy.
- Companies with profits positioned in the £250,000 and above will be taxed 25%.
Example Calculation:
Let’s say your UK LTD makes a profit of £120,000. This means your corporation tax rate is around 22-23%, and marginal relief applies.
It is important to note that non-residents who manage their company abroad can avoid UK corporation tax on global profits, provided that their business does not have UK-source income.
4. UK Source Income and Tax Obligations
If your company’s business is controlled and managed from outside the UK, there are still some instances where your company may be liable to pay UK tax. For example:
- Income from UK customers: Contracts performed UK or aimed at customers in the UK may be deemed taxable by HMRC .
- A fixed UK business presence: UK office, employees or other business assets and facilities (e.g. warehouses) and employees can trigger UK tax.
- Employment: UK employees or staff members generate income or profits for the company.
- Merged Taxation: UK Trade and Income Tax law: Having UK property in the company’s name results in property or rental income that is in UK taxable.
Non-Residents may wish to consider the following: the location and structure of your company’s operations can influence UK tax.
For example, placing stock in a UK fulfilment center, for example Amazon FBA, may create UK tax liabilities, but shipping stock to customers from abroad may help avoid UK tax liabilities.
5. Double Taxation Treaties
The UK has double taxation treaties with more than 130 countries including with Nepal, India, UAE, USA. Most Western European countries are included in this list, as well as some Eastern European countries.
Double taxation treaties help to stop:
- Paying tax twice on the same income
- Help determine the primary country with taxing rights
- Potentially lower withholding tax on dividends, interest, and royalties
Example: Where a company is managed from Dubai with contracts in the UK, a double taxation treaty may reduce UK withholding taxes and profit tax and ensure profit are all taxed in Dubai.
Wording Tips: Always refer to your country and UK treaty to maximize tax. Bizstartz will assist you in this area.
6. VAT (Value Added Tax) For Non-Resident Companies
VAT regulations are independent of corporation tax and this causes confusion to non-resident business owners.
You must register for VAT when:
- You keep goods (warehouses and fulfillment centers included) in the UK.
- You deal with UK customers and your sales turnover is more than the annual limit of £90,000.
- You bring goods into the UK and you wish to reclaim the import VAT.
If you are registered, your company will have to:
- Charge VAT on sales.
- Submit VAT returns to HMRC on a quarterly basis.
- Maintain proper records for all transactions you entered the UK.
Example:
An e-commerce seller of electronics who uses Amazon FBA to sell to UK customers is even non-resident VAT registered and must charge 20% VAT on the sales.
Bizstartz is here to provide VAT registration and compliance to non-residents to help them with this.
7. Accounts and Annual Filings
All Companies Limited in the UK have annual reporting and filing obligations, even if there is a non-resident owner.
Submit to Companies House:
- Annual accounts
- Confirmation statement
To HMRC:
- Corporation tax return (if applicable)
- VAT returns (if applicable)
Even dormant companies (no income or transactions) must submit a report labelled “Dormant Company”.
Negative effects of non-compliance:
- Failing to file on time gives you a penalty of £150–£1,500 a year for your accounts.
- Dissolution or a strike-off of your company.
- Loss of reputation for your international business.
Suggestion: Hire specialized accountants for non-resident UK companies. At Bizstartz, we make sure that your filings will always be timely and precise.
How Bizstartz aids non-resident Entrepreneurs?
Businessstartz aids international entrepreneurs in setting up and running UK Limited Companies. These include:
- Forming a UK company for non-residents that is a completely online procedure.
- Registered office & mail forwarding.
- Assisting in opening a UK business bank account.
- Adding a VAT and EORI for international trade and travel.
- Filing annual accounts and taxes.
- Providing ongoing compliance and bookkeeping.
We assist with efficient management, legal compliance, and tax so that you can focus on the international growth of your company.
Key Takeaways
- Non-residents are allowed to completely own a UK Limited Company even if they are not in the UK
- There are potential UK corporation tax implications depending on where the business is managed and controlled. If managed and controlled from outside the UK, then there will be no UK corporation tax liability
- UK tax law applies to income generated in the UK.
- If you sell or store goods in the UK, you may need to register for VAT.
- You must make annual filings to Companies House and HMRC.
- You can rely on double taxation treaties to not be taxed twice.
Final Thoughts
A UK Limited Company is a valuable business formation option for UK tax purposes and for non-residents, as it expands credibility and provides a way to enter new international markets and new operational efficiency.
Tax planning will bring the business unnecessary costs, and it is important to plan for tax compliance. Consulting tax experts will bring the business tax efficiencies and will legalize the business operations.
Even if a non-resident, Bizstartz can cover UK business formation, tax planning, and ongoing compliance.
Start your UK Company today with Bizstartz:
✅ Fully Online Process
✅ Global Founder-Friendly
✅ End-to-End Support
