Having now answered the key question of whether you can run a UK limited company from abroad, it’s fitting to address another query we’re often asked – ‘Can I work as a UK contractor for a company in another country?’ writes Kevin Austin, managing director of Access Financial.
Certainly, it’s possible, and with the weather often better abroad, it’s even understandable!
Top 10 considerations to work as a remote UK contractor for a company overseas
With more controllable aspects in mind, let me breakdown the top 10 considerations for working as a remote contractor for a company in another country while you, a UK tax resident, continue to be based in the UK:
1. Your UK tax residency
First and foremost, working remotely for a foreign company likely doesn’t affect your UK residency – but residency needs to be ‘ticked off’ as a top consideration.
For this reason, it’s best to consult a tax adviser for specifics, especially regarding potential tax implications on your worldwide income.
As a general rule, days spent outside the UK do not impact your UK tax liability. However, if you are looking at spending days abroad, incidental to your duties, then this spending of a significant amount of time is what can cause issues or changes.
But you would have to leave the UK for an entire year for work to lose ( or ‘escape’ depending on your motivations) your UK tax residence.
2. Your tax residency status in the client country
Less obvious to many UK contractors who dabble in contracting overseas, you may spend long enough abroad to become liable for taxes in the client-company’s country.
For example, individuals become residents in Switzerland if they have worked in Switzerland for a period exceeding 30 days.
This rule is based on the Federal Act on Direct Federal Taxation (DBG) and the Tax Harmonisation Act (StHG).
The Swiss authorities will look at your intention to reside permanently, so this ’30-day rule’ may not be rigidly enforced.
That said, Switzerland has Double Taxation Treaties with most developed states so getting a set-off should be straightforward.
But to any contractors put off, I would say this should not be a reason not to work in Switzerland, where taxes are low by advanced country standards.
On the other hand you could work remotely in Namibia — and never be taxed on your foreign earnings at all!
3. Meetings / visas if you attend the client country
If you are contracting from the UK but for a non-UK company which is abroad, you should always check the visa requirements for the country in advance of needing to visit it for business meetings.
For reference, as a Briton, you can obtain a business visa for EU and EEA countries, permitting you to attend business meetings, but be aware that it prohibits the carrying out of paid work. More positively, as well as meetings, such a visa does permit you to attend conferences and training sessions, however.
However, a business visa is typically more difficult and takes longer to obtain than a tourist visa. Increasingly, where you need a tourist visa, obtaining one on arrival is becoming a more common occurrence.
Coming to Cyprus, for example, on a business visa from India might take six weeks to obtain. By contrast we have seen work visas issued in one day.
To restate — business visa holders may attend meetings, exhibitions, training and the like. However, they cannot perform lucrative employment. They may, though, sign lucrative contracts!
And finally on visas, remember that should a border official suspect that you are not on holiday when travelling on a tourist visa they have the power not to permit entry. So, if you turn up on a freezing cold day in a business suit without sun cream and Speedos, you might raise suspicion as to your true motives and be denied entry!
4. Whose laws apply and when?
UK company tax law (IR35) applies since the place of supply is the UK (i.e. when you’re working remotely in the UK).
As you’ll likely know, IR35 determines your tax status. However, because your client is outside the UK (and let’s assume for the purposes of this article the client is wholly overseas and so has no UK connection), you, the director, have the responsibility to assess whether you are inside or outside of IR35.
However, if you’re on-contract with this wholly overseas organisation, foreign laws might apply in specific situations. For example, intellectual property rights. If in doubt, I recommend consulting a lawyer familiar with both UK law and the host country’s business frameworks.
5. Certification of tax residence
Depending on where your client is located, you may need to provide them with a certificate of tax residence.
In fact, many states nowadays will demand evidence of your tax status, without which they will not apply treaty provisions such as 0% or reduced rates of ‘withholding taxes’ (or ‘WHT’).
The payer (i.e. your client) would then be obliged to apply the standard rate of WHT from your invoices.
Withholding taxes are not based on a tax liability, but a mechanism that ensures states receive their share of revenues and that they do not grant treaty relief without evidence of residence in that other state.
In the event that your client is obliged to deduct local WHT from their ‘remittances’ (i.e. payments made from a taxpayer — a company or individual, in one state to a taxpayer in another state), you should be able to obtain set-off relief from your taxes due to HMRC.
Remember though, to handle your own tax obligations — whether company or individual, you must advise HMRC of your business operations. You must also comply with HMRC’s reporting / filing requirements and deadlines.
6. Your set-up, and your money
Setting up a UK limited company is an alternative to working in the UK as a sole trader or an umbrella company may be best for your operation. Each model has its own tax and administrative implications but generally speaking, a UK limited company will be more anticipated by an overseas-based end-user.
Should you decline being a brolly employee for the assignment, you should open a business bank account in the UK to manage your finances and receive payments. A UK business bank account isn’t required if you opt to be a sole trader (as it is for a limited company, but it’s still highly recommended to keep your monies separate.
When dealing with an overseas client, you should consider the international transfer fees and currency fluctuations. Shop around for deals here, and even ask the client if they may know of a broker who they use and so might vouch for.
7. Technology / infrastructure
Remote working has a reputation for never being more convenient than in 2024, but this largely depends on your own individual access to a reliable and high-speed internet connection. We’d further recommend video conferencing and project management tools for effective communication and collaboration with the non-UK client.
8. Factor in no agency (potentially)
As overseas engagements are more likely to be direct-to-client opportunities, you won’t have a recruitment agency in the chain. That’s why, above, I recommend potentially being free if you wish to be a sole trader – a candidate set-up most agencies won’t engage with.
However the downside of not having an agency can be sharp – so strongly consider replacing this vacuum by seeking professional advice, ideally from an accountant specialising in UK contractors working abroad for comprehensive tax and legal guidance specific to your situation.
9. Insurance
Longer distance gigs are inherently riskier and with language differences to potentially factor in as well, business insurance can be a wise decision to protect your company.
You should look into professional indemnity insurance to protect against claims for errors and omissions. If you employ others or have people visit you, you should check if you need civil or employment insurance.
10. Cultural clashes
Language differences can lead to flashpoints but there’s also business etiquette to consider – what goes down well in Tokyo you’d be laughed at a little for trying in Tijuana!
So try to get ‘the skinny’ (a phrase it may help to know if your client is US-based) on what’s the done thing in terms of business engagement, approach and interaction with your overseas client company. ‘When in Rome…’ can be helpful, even if you will be UK-based.
Similarly, it doesn’t hurt to keep abreast of local laws that potentially affect you and them, while of course not forgetting that it’s the UK’s regulations on visas, taxes, and business operations which will affect you most as a UK contractor supplying goods or providing services to a company based wholly overseas.
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