Setting Up a UK Business as a Non-Resident: Structures, Taxes, and Compliance

If you’re living outside the UK but want to start a business there, you’re not alone. Thousands of non-residents run UK companies every year-from freelancers in Canada selling to British clients, to tech founders in Australia building SaaS products with UK bank accounts. The UK doesn’t require you to live here to own a company. But that doesn’t mean it’s simple. Get the structure wrong, and you could pay too much tax. Skip the compliance steps, and you risk fines or even having your company dissolved. This guide cuts through the noise. You’ll learn exactly which business structure works for you, how UK taxes apply to non-residents, and what you absolutely must do to stay legal.

Choosing the Right Business Structure

The first decision shapes everything: taxes, liability, and how you report to HMRC. As a non-resident, you have three real options: sole trader, limited company, or a UK branch of your foreign business.

Sole trader sounds easy-just register with HMRC and start invoicing. But it’s risky. You’re personally liable for all debts. If a client sues you or a supplier claims unpaid bills, your personal assets (home, savings) are on the line. Plus, you pay income tax and National Insurance on all profits, even if you leave the money in the UK bank account. Most non-residents skip this unless they’re doing tiny, low-risk side gigs.

UK limited company is the standard choice. You create a separate legal entity. Your personal assets stay protected. You pay corporation tax (25% as of 2025) on profits, not personal income tax. You can pay yourself through salary and dividends, which gives you more control over your tax bill. You’ll need a UK registered office address (can be a virtual service), at least one director (you can be the director, even if you live abroad), and a company secretary (optional if you’re the only director). You register through Companies House. It costs £12 online.

Branch of a foreign company is rare. Only make sense if your overseas business is already large and wants to operate in the UK under the same legal name. You must register with Companies House as a non-UK company. You’ll file annual accounts in both countries. Most small businesses avoid this-it’s more paperwork, more cost, and no real advantage.

For 95% of non-residents, a UK limited company is the move. It’s clean, scalable, and gives you credibility with UK clients and banks.

UK Tax Rules for Non-Residents

Tax is where people get tripped up. The UK doesn’t tax you just because you own a company here. It taxes you based on where the business earns money.

If your company only sells to customers outside the UK-say, you’re based in Brazil and your clients are in Germany, Japan, and the US-your profits are not UK-sourced. You still register and file with HMRC, but you likely pay zero UK corporation tax. You’ll need to prove your income is foreign-sourced. Keep records: client locations, invoices showing overseas addresses, bank statements showing payments from abroad.

If your company sells to UK customers-even one-HMRC considers part of your profit UK-sourced. You pay corporation tax on that portion. There’s no threshold. One £100 sale to a London client means £100 is taxable in the UK. You don’t pay VAT unless your UK sales exceed £90,000 in a 12-month period. But you still need to file a corporation tax return (CT600) every year, even if your tax bill is £0.

Dividends you pay yourself as a shareholder are not taxed in the UK if you’re not a UK resident. But your home country might tax them. Check your local rules. For example, if you live in the US, you’ll report those dividends on your IRS return and may owe US tax, but you can claim a foreign tax credit for any UK corporation tax paid.

Don’t assume the UK has a tax treaty with your country. Even if it does, it doesn’t eliminate your filing obligations. You still need to submit annual returns. HMRC doesn’t care where you live-they care if your company operates in the UK.

Compliance Requirements You Can’t Ignore

Running a UK company means staying on top of three things: registration, filings, and records.

First, you must register your company with Companies House. You need: a company name (not already taken), a registered office address (anywhere in the UK-even a mailbox service counts), at least one director (you can be it), and a statement of capital (how many shares, who owns them). You’ll also need a People with Significant Control (PSC) register. If you own more than 25% of the shares or voting rights, you’re listed as a PSC.

Second, you must file annual accounts. These are simple if you’re a small company: a balance sheet and profit & loss statement. You don’t need an audit unless you’re large. File them online via Companies House. Deadline: 9 months after your accounting period ends. Late filing = automatic fines, starting at £150.

Third, file a corporation tax return (CT600) with HMRC every year. This is separate from Companies House. You report your income, expenses, and calculate your tax bill. Even if you made no profit, you still file. HMRC uses this to confirm your tax position. Missing this deadline can trigger penalties and even a forced company dissolution.

Keep records for six years: invoices, bank statements, payroll, expense receipts. Digital copies are fine. HMRC can ask for them anytime. If you’re using accounting software like Xero or QuickBooks, sync it with your UK bank account. It makes everything easier.

Banking and Payments

Opening a UK business bank account as a non-resident used to be nearly impossible. Now, it’s tough but doable. Traditional banks like HSBC or Barclays often refuse. But fintechs like Wise Business, Tide, and Revolut Business have made it easier.

You’ll need: your company registration number, proof of address (a utility bill or bank statement from your home country), a government-issued ID (passport), and sometimes a short video call with a compliance officer. Some services ask for a UK business plan or proof of client contracts. Don’t wait until you’re ready to pay suppliers to start this process-it can take 2-4 weeks.

Use a UK business account to receive payments from UK clients. It looks professional. If you’re paid in euros or dollars, use Wise to convert and hold multiple currencies. Avoid using your personal account for business income. HMRC will notice, and you could trigger a tax investigation.

Common Mistakes Non-Residents Make

Here’s what goes wrong-and how to avoid it:

• Thinking “no physical presence = no tax.” You don’t need an office or staff in the UK to owe tax. Selling to UK customers creates a taxable presence.
• Skipping the CT600 because you made no profit. Filing is mandatory. HMRC doesn’t accept “I didn’t earn anything” as an excuse.
• Using a home address as your registered office. If you’re in the US, your Colorado address can’t be your UK registered office. You need a UK address-even a virtual one from a service like Company Formations Limited.
• Not updating your PSC register. If you bring on a partner or sell shares, you must update Companies House within 14 days. Failure = fine.
• Ignoring VAT registration. If your UK sales hit £90,000, you must register for VAT. Even if you’re below the threshold, you can register voluntarily to reclaim VAT on your expenses.

When to Get Professional Help

You can set up a UK company yourself. But if you’re unsure about tax residency rules, international double taxation, or complex accounting, hire a UK accountant who works with non-residents. Don’t pick a generalist. Look for someone who specializes in overseas businesses. They’ll know how to file CT600 correctly, advise on dividend timing, and help you avoid costly errors.

Cost? Expect £800-£1,500 per year for basic compliance. That’s cheaper than a £1,000 penalty for a late filing or a £5,000 tax bill from a misclassified expense.

Start with a one-hour consultation. Ask: “Have you worked with clients from [your country]?” If they say no, keep looking. Your accountant should understand both UK law and your home country’s rules.

Next Steps

Here’s your action list:

1. Choose a unique company name and check availability on Companies House.
2. Sign up for a UK registered office service (e.g., 1st Formations, Rapid Formations).
3. Apply for your limited company online through Companies House (£12).
4. Open a UK business bank account with Wise or Tide.
5. Register for Corporation Tax with HMRC (do this within 3 months of starting business activity).
6. Set up accounting software and connect your bank feed.
7. Keep all receipts and invoices for six years.

Don’t wait for the perfect moment. The UK doesn’t require you to be here. But it does require you to be organized. Get the structure right, file on time, and you’ll have a clean, professional UK business that works for you-no matter where you live.