Understanding UK Corporate Tax Residency: Key Points and Implications

From a UK perspective, the determination of corporate tax residency is crucial for understanding a company’s tax obligations. A company is considered a UK tax resident if it is either incorporated in the UK or if its central management and control (CMC) actually resides in the UK. This residency status dictates the scope of the UK’s taxing rights over the company.

Criteria for UK Tax Residency

  • Incorporation in the UK: Any company incorporated in the UK is automatically deemed a UK tax resident.
  • Central Management and Control: A company not incorporated in the UK can still be considered a UK tax resident if its central management and control abides in the UK. This criterion involves determining where the company’s ‘paramount authority’ is exercised, which typically involves the board of directors.

Tax Implications for UK Tax Resident Companies

UK tax resident companies are subject to UK corporation tax on their worldwide income and gains. This means that all profits, regardless of where they are generated, are taxable under UK law. In contrast, non-UK tax resident companies are generally only subject to UK corporation tax on profits attributable to a UK permanent establishment. Additionally, they are liable for UK income tax on certain UK-source income.

Determining Central Management and Control

The question of where a company’s central management and control resides is a factual one. Key points to consider include:

  • Exercise of Paramount Authority: The central management and control is where the company’s paramount authority is exercised, usually by the board.
  • Influence vs. Control: Influencing the board does not equate to controlling it. The distinction is crucial in determining the true locus of control.
  • Rubber Stamping: Courts are vigilant against scenarios where the board merely rubber-stamps decisions made by others, which would indicate that the real management and control lie elsewhere.

Dual Tax Residency

A company can be dual tax resident, meaning it is considered a tax resident in two countries. In such cases, the corporate residency rules of both countries must be examined. If a dual residency situation arises, a tax treaty (if one exists) between the two countries will typically determine which country has the primary taxing rights. These treaties often provide mechanisms to resolve dual residency conflicts to prevent double taxation.


Understanding where a company’s central management and control resides is essential for determining its tax residency and, consequently, its tax obligations in the UK. Companies must carefully assess their management structures and operations to ensure compliance with UK tax laws and to navigate the complexities of dual tax residency effectively. This explanation is a simplified overview, and there are many additional factors that can come into play. Therefore, it is always advisable to contact a tax professional to obtain tailored advice and ensure all specific circumstances and nuances are properly addressed.

For more information from us, or if you wish to discuss corporate tax residency, please use our enquiry form or email us at advice.uk@dixcart.com.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

Ceasing to be UK Tax Resident – Don’t Get it Wrong!


It is January 2025 and two people are sitting at the departure gate at Heathrow waiting for their (inevitably) delayed flight to the Bahamas. They start a conversation and talk about why they are flying to this Caribbean island. 

Person A, Mrs Sunseeker, explains to Person B, that she had lived in the UK for a long time as a resident “non-dom,” but that expected changes to the tax rules for longer term residents had meant that she had decided to leave the UK and cease being tax resident; “My friend told me I just had to spend fewer than 90 days each year in the UK.” she declares.

Fortunately for Mrs Sunseeker, Person B, Mrs Tax, is, by nominative determinism, a tax adviser and explains that the old ‘90 day’ rule does not apply anymore and suggests that she takes a look at the UK statutory residence test – link to STR.

Background for Mrs Sunseeker

Mrs Sunseeker moved to the UK in the early 2010s, as a student.  After graduating, she was offered a job in the financial services industry. She has been very successful and accumulated significant personal wealth. 

In 2015, she inherited the shares of a large family business, back home in Dubai, which started to generate a regular dividend income of around £5 million a year which she has kept in her bank account in Dubai. As a UK remittance basis of taxation user, the Dubai dividends have not been taxed in the UK, as Mrs Sunseeker never remitted them into the UK. 

However, with the UK non-dom rules changing, remaining in the UK was going to be just too expensive for income and inheritance tax purposes.  She has therefore decided to move to a warm country.  Mrs Sunseeker is planning to carry on working for the same employer (taking advantage the fact that her firm realises she can work remotely) and, indeed, is likely to be working very hard on the days that she returns to the UK.

She is married. Her husband is British and does not want to spend as much time outside of the UK as his wife. His only source of income is in the UK and he still enjoys his work.  As he is going to stay, they will keep their home and Mrs Sunseeker will live there when she returns to visit him.

What is Mrs Sunseeker’s Tax Status and Why?

While waiting for the flight, Mrs Sunseeker takes a look at the residence test rules.  She realises that the first two parts of the test, the ‘Automatic Tests’ do not apply to her and reads on to the ‘Sufficient Ties’ section. Mrs Sunseeker has four such ties, or connections:

  • Spent more than 90 days in the UK in both of the previous two tax years;
  • Will have available accommodation in the UK;
  • Has a UK tax resident spouse and will continue to do so;
  • Will work in the UK for more than 40 days under the definition of the test.

What Will the Tax Impact Be?

As she has four ties, Mrs Sunseeker will be tax resident in the UK, for at least the first two years after she leaves, by spending just 16 days per year in the UK, far lower than the 90 she had anticipated.

The next time she receives her large dividend, she would still be considered UK tax resident and will suffer UK income tax. It may be even worse, if she has not paid this tax on time she would receive a late payment penalty, which is quite likely because she no longer believed she was UK tax resident and she could be liable for penalties under the ‘offshore assets’ rules too.

The problem would become further compounded were Mrs Sunseeker to sell her shares in the family business in Dubai for a large gain, while she believed she was not UK resident.

Other Considerations

Please note for completeness, that the UK ‘split year rules’ are not being considered, nor are the tax implications of Mrs Sunseeker continuing to receive a salary for work she undertakes when in the UK. Dixcart, would of course advise on these, where relevant.  The Bahamas does not have a double tax treaty with the UK, and there is therefore no tie breaker clause to consider in this scenario either.

So, What Could Mrs Sunseeker Do?

Can you believe it, the flight is still delayed!

Mrs Sunseeker picks up her phone and calls Mr Sunseeker. Whilst he loves his job, he now understands that there will be a high tax cost if his wife does not properly exit UK tax residence.  He packs his things and heads to the airport. While on his way, he calls his employer and resigns, and then calls an estate agent to list the home for immediate rental.

The repercussions of the two actions above, would be to reduce the number of UK ties that Mrs Sunseeker has, from four to two:

  • 90 days in both of the previous two tax years; and
  • Work tie (assuming she still works, when back in the UK).

Now she would be able to spend up to 90 days in the UK per year and lose her UK tax residence status.

Very lucky!

Whilst everyone else on the flight was cursing the delay, Mrs Sunseeker had struck lucky.  However, had Mr and Mrs Sunseeker started to plan earlier than at the airport departure lounge, there would have been more options to consider around their employment situation and their home status, and they might have avoided having to take such extreme steps.

How Can Dixcart Help?

Dixcart’steam of lawyers, accountants, immigration and tax professionals would have assisted Mr and Mrs Sunseeker with:

  • Pre-departure tax planning;
  • Ongoing tax planning, to ensure that UK tax residence is not accidentally acquired again in the future;
  • Employment law advice for both individuals in relation to their ongoing employment contracts, should they wish to continue to work, as well as related UK tax advice regarding the income being earned;
  • Application for Indefinite Leave to Remain before they leave the UK, so they can be sure that they can return in the future.

Additional Information

If you require additional information on this topic, please contact your usual Dixcart adviser or speak to Paul Webb or Peter Robertson in the UK office: advice.uk@dixcart.com.

Dixcart UK, is a combined accounting, legal, tax and immigration firm.  We are well placed to provide these services to international groups and families with members in the UK. The combined expertise that we provide from one building, means that we work efficiently and coordinate a variety of professional advisers, which is key for families and businesses with cross-border activities.

By working as one professional team, the information we obtain from providing a service, can be shared appropriately with other members of the team, so that you do not need to have the same conversation twice!  We are ideally placed to assist in situations as detailed in the case study above. We can provide cost effective professional services for companies and individuals and also offer in-house expertise to provide assistance with more complex legal and tax matters.

UK Spring Budget 2024

The UK Spring Budget 2024: Amendments to Taxation for Individuals Outside the UK

Starting from April 6, 2025, the existing non-domicile regime will come to a close, replacing the concept of domicile as a pertinent connecting factor in the current tax structure with one grounded in tax residency.

Currently, individuals residing in the UK but not domiciled can enjoy the remittance basis for their initial 15 years of residency in the UK. This means that they are not obligated to pay UK taxes on income and gains earned outside the UK unless those funds are brought into the UK.

With the forthcoming system, individuals who choose to opt into this new framework will be exempt from UK taxes on any foreign income and gains for their initial 4 years of tax residency, provided they have maintained non-tax residency status for the preceding 10 years.

Who is eligible for new regime?

Individuals will qualify for the new regime if they have been non-UK tax resident for at least 10 consecutive tax years, regardless of their domicile status. The new regime will apply for their first 4 tax years of UK residence, so this will apply to returning UK domiciliaries.

Main summary of changes

Individuals will not pay tax on foreign income and gains (FIG) arising in the first 4 years after becoming UK tax resident, where a claim is made. They will be able to bring these funds to the UK free from any additional charges and there will be no need to segregate or trace funds during this period. They will continue to pay tax on UK income and gains, as is the case for non-domiciled individuals now. The individual will also lose their entitlement to personal allowances and the capital gains tax annual exempt amount.

Individuals who on 6 April 2025 have been tax resident in the UK for less than 4 years (after 10 years of non-UK tax residence) will be able to use the new regime for any tax year of UK residence in the remainder of those 4 years. For example, an individual who became resident in the UK in 2022/23, after a 10 year period of non-residence, will have been resident in the UK for up to 3 tax years on 6 April 2025. They will be able to claim under the new 4 year FIG regime for 2025/26 because this is their fourth year following a period of 10 years non-UK tax residence.

Transitional Provisions

As the new regime will represent a significant change for existing Resident Non-Domiciled individuals, there are a number of transitional arrangements that will be available as follows:

  • Individuals who move from the remittance basis to the arising basis on 6 April 2025 and are not eligible for the new 4 year regime, will for 2025/26 only pay tax on 50% of their foreign income. This applies to foreign income only and does not apply to foreign chargeable gains. For 2026/27 onwards, tax will be due on worldwide income and gains in the normal way.
  • Individuals who have previously claimed the remittance basis of taxation and are neither UK domiciled not deemed domiciled by 6 April 2025, will be able to elect to rebase assets held personally to their value at 5 April 2019, so they will only be taxed on capital gains since that date. This is in respect of disposals which take place on or after 6 April 2025.
  • Individuals who have previously been taxed on the remittance basis will be able to elect to remit foreign income and gains that arose before 6 April 2025 to the UK at a reduced rate of 12%. This is a new Temporary Repatriation Facility that will only be available for the 2025/26 and 2026/27 tax years. This facility will not apply to foreign income and gains generated within trusts and trust structures.

Taxation of assets held in Trust

From 6 April 2025, the protection from taxation on future income and gains that arise within trust structures (wherever established) will be removed for all current non-domiciled and deemed domiciled individuals who do not qualify for the new 4 year FIG regime.

Under the new regime, for as long as an individual qualifies for the new 4 year regime, they will not pay UK tax on the income and gains of the trust as they arise or on receipt of trust distributions.

Once the individual Is no longer eligible for the new 4 year FIG regime, they will be required to pay UK tax on all profits arising within a trust structure which they have established.

Inheritance Tax

Currently, an individual’s liability to Inheritance Tax depends on their domicile status and the location of the asset in question. From 6 April 2025, the government intends to move IHT to a residence-based system and this will be subject to consultation on how this is best achieved.

The timing of any legislation enacting the changes is unclear and the government has suggested that an individual’s worldwide assets would fall with the scope of UK inheritance tax once the individual has been UK resident for 10 years. It is suggested that once the individual is within the scope of UK inheritance tax they will remain as such for 10 years after the individual ceases to be UK resident.

Under the current rules, non-UK assets held in trust structures that were established by Resident Non-Domiciled individuals before they became deemed domiciled in the UK, are outside the scope of UK inheritance tax. The government has confirmed that the treatment of non-UK assets settled onto non-UK trusts before 6 April 2025 will continue to be outside the scope of the UK Inheritance Tax regime.


The announcements in the Spring 2024 Budget represent the biggest change to the way in which non-UK domiciled individuals are taxed in the UK. This is an area which is likely to continue to develop and further details will emerge in the coming months which will hopefully allow individuals time to prepare for the new regime well in advance of its implementation date of 6 April 2025.

If you would like any further information regarding the new measures outlined above, please don’t hesitate to contact your usual Dixcart contact or enquire at advice@dixcart.com