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There is a moment almost every British expat entrepreneur experiences.
You’re sitting somewhere abroad - Dubai, Singapore, Hong Kong, Lisbon, Riyadh - and you look at your life:
You built something. A business. A consultancy. A client base. A reputation. Income. Freedom. Opportunity. Momentum. You feel proud - and you should. Most people never get this far.
But here’s the uncomfortable truth: Running a business abroad as a British expat is not just about building wealth. It involves navigating some of the most complex tax rules faced by internationally mobile individuals. And many British entrepreneurs underestimate how exposed they may be. I’ve met too many business owners who said the same painful line: “Nobody ever told me this mattered.”
Until:
Some of the most costly cross-border tax outcomes can affect:
This article explains the key tax rules and planning considerations British expat entrepreneurs should understand when operating internationally.
Important note:
This article is provided for general information only and does not constitute tax, legal or financial advice. UK tax outcomes depend on individual circumstances and can change. Professional advice should always be taken before acting on any of the points discussed.
Running a business abroad is liberating.
You’re:
But with freedom comes complexity - and with complexity comes tax risk.
British expat entrepreneurs are the most likely group to:
This article explains how the relevant tax rules operate in practice, rather than relying on simplified or generic explanations.
Let’s break it down.
Nobody writes about this, but it’s true:
Entrepreneurs run on emotion.
You don’t build a company from fear.
You build it from:
But tax systems are the opposite.
Tax systems don’t operate on emotion - they operate on:
That mismatch creates enormous risk for globally mobile British business owners.
Entrepreneurs think “What’s possible?”
Tax authorities think “What’s taxable?”
This is a common assumption that can lead to misunderstandings.
Here’s the truth:
If there is sufficient UK connection through duties performed, decision-making, or business activity while you are in the UK, UK tax exposure may arise.
This includes:
Even limited actions can be relevant when assessing:
UK tax exposure can arise where there are relevant UK connections, UK duties performed, or UK-based business activity, depending on the facts and the applicable rules.
Entrepreneurs often face higher risk under the SRT due to their travel patterns and working arrangements. Why?
Because entrepreneurs:
This quickly triggers:
For SRT purposes, a UK workday broadly means a day on which more than three hours of work are performed in the UK, and 40 or more UK workdays can trigger a work tie. Depending on the number and type of UK ties, previous residence history, and work patterns, UK residence can arise after relatively few days spent in the UK.
And if UK residence is established:
Entrepreneurs can underestimate how sensitive the SRT can be to travel patterns, ties, and workdays.
This is an important area. A company may create a UK permanent establishment (PE) depending on the nature, authority, and regularity of activities carried out in the UK. Examples can include situations where contracts are habitually concluded in the UK, key commercial decisions are taken in the UK, or the UK is used in a way that looks like a fixed place of business (for example, an office base or regular use of premises), or where UK-based personnel carry out core functions.
Where a UK permanent establishment exists, the UK may tax profits attributable to UK activity, based on attribution principles.
The entrepreneur who thinks:
“I live in Dubai, so I have no UK tax exposure”
…is often wrong. Residence alone does not determine corporate tax exposure; business activity and decision-making location are also relevant.
PE is a commonly misunderstood part of international tax.
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If you’re a:
income is generally taxed by reference to where the work is performed, subject to the relevant treaty and domestic rules.
Meaning:
This is a common area where expats inadvertently create exposure.
If you:
→ You may have UK workdays
→ UK income tax exposure may arise depending on circumstances
→ This may contribute to an SRT work tie
Remote work can increase the likelihood of inadvertent UK workdays being created during visits.
Entrepreneurs often mix:
Across multiple jurisdictions.
Each category is taxed differently in treaties:
1. Salary
Employment income is often taxable where duties are performed, but treaty conditions and domestic rules (including short-term visit and employer tests) can affect the outcome.
2. Dividends
Tax treatment depends on UK residence status in the relevant tax year, the payer jurisdiction, and the applicable double tax treaty (including any withholding tax limits).
UK dividend tax rates are scheduled to increase by 2 percentage points for the basic and higher rate from 6 April 2026, with the additional rate remaining unchanged (a UK-wide rate change, not a return-specific rule).
3. Director fees
Director remuneration is often taxable where the relevant duties are exercised, but treaty wording and the specific facts can affect the position.
4. Self-employed income
Business profits are typically taxable in the country of residence unless a permanent establishment or fixed base exists in another country, subject to the relevant treaty and domestic rules.
️5. Business profits
Business profits may be taxable in another country to the extent attributable to a permanent establishment in that country, subject to attribution rules and the relevant treaty.
6. Passive income
Taxed depending on residency and treaty. British expat entrepreneurs can misallocate these categories, which can increase the risk of double taxation or mismatched reporting.
Many expat founders keep a UK company because:
But if you:
the UK may still tax your company depending on where it is resident for tax purposes and where profits are generated.
Or worse:
Your host country may also seek to tax the company if it considers central management and control or effective management to be located there. This can create overlapping tax obligations and, in some cases, double taxation or compliance issues if positions are not aligned, documented, and reported consistently. A UK company can create complex and overlapping tax considerations if management and operations are not aligned with residency.
Returning to the UK is often a point where tax exposure can increase for entrepreneurs, particularly around timing of income, gains, and major transactions.
If you return mid-year, UK residence status and split-year treatment (if applicable) will affect the extent to which worldwide income and gains are brought into UK taxation for that year. For example, selling a business abroad early in the tax year and then becoming UK resident later in the same tax year can change the UK tax position.
Potential UK tax exposure depending on residence status and split-year treatment.
→ Prior planning can be undermined if residency changes unexpectedly.
Entrepreneurs returning to the UK should consider their tax residence position alongside their relocation timeline.
The following examples are illustrative and simplified to demonstrate common issues faced by internationally mobile entrepreneurs. Actual outcomes depend on individual facts, timing, and applicable legislation.
Case Study 1 - The Dubai Consultant With UK Workdays During Visits
Scenario
A UK national lives and works mainly in Dubai, but makes several short trips back to the UK over the tax year. During those visits, they take client calls, join Zoom meetings, and complete deliverables from a UK home.
What can go wrong
Typical outcome drivers
Key takeaway
Assume UK visits can create UK workdays where you do substantive work. Keep contemporaneous records of UK days, duties performed, and where work was carried out.
Case Study 2 - The Hong Kong Entrepreneur With a UK Board Role
Scenario
An entrepreneur is based in Hong Kong and is a director of a company. Three board meetings are held in London each year, with strategic decisions taken and documented in the UK.
What can go wrong
Typical outcome drivers
Key takeaway
Board meeting location and substance matter, and documentation matters even more. Regular UK-based governance activity can create UK tax and reporting considerations even if the director lives abroad.
Case Study 3 - The Singapore Founder Who Sold During a UK Residence Transition Year
Scenario
A founder sells shares in a business while living in Singapore. Later in the same UK tax year, they return to the UK and begin spending significant time there. They assume the sale is outside UK tax because it happened before the move.
What can go wrong
Typical outcome drivers
Key takeaway
Residence transition years are high-risk for disposals. Timing, split-year conditions, transaction mechanics, and any temporary non-residence considerations should be checked early, ideally before heads of terms.
The precise outcome depends on the interaction between UK domestic law, split-year rules, and the specific treaty position (if applicable).
Case Study 4 - The Digital Nomad With UK Family and an Available UK Home
Scenario
A digital nomad works remotely across multiple countries but keeps a UK home that remains available. Their spouse and children spend substantial time in the UK, and the individual returns frequently.
What can go wrong
Typical outcome drivers
Key takeaway
Digital nomad arrangements can be high-risk where the UK remains a base for family or accommodation. The SRT is evidence-led and can produce UK residence outcomes even where someone feels international.
Case Study 5 - The Spain / Dubai Hybrid CEO With Split Living
Scenario
A CEO splits the year between Spain and Dubai and also visits the UK for meetings and family time. They assume that spreading time across countries reduces tax exposure everywhere.
What can go wrong
Typical outcome drivers
Key takeaway
A split-location lifestyle can be manageable, but it requires deliberate tracking and clear evidence. Where more than one country has a plausible residence claim, treaty analysis (and supporting documentation) may be needed and should not be left until a transaction or enquiry occurs.
Selling a business is often the biggest financial event of your life.
For British expats, this is often the point at which UK tax exposure becomes most significant.
Here’s the truth:
If a business is sold in the same tax year in which UK residence is established, and split-year treatment does not apply, the gain may fall within the scope of UK tax.
This includes:
This can occur in practice:
✔️ Founder sells business abroad in January
✔️ Moves back to the UK in March
✔️ Split-year fails
✔️ UK taxation may apply to worldwide income and gains depending on residence status and split-year treatment.
In many cases, outcomes can be influenced through careful forward planning.
Timing can be a key factor.
If you plan to:
Many entrepreneurs consider reviewing their tax residency position 12–18 months in advance of major events.
Share Sales, Vesting Events & RSUs: Multi-Country Tax Chaos
Entrepreneurs often have:
And they are taxed depending on:
The biggest mistake:
Exercising options or letting RSUs vest:
Tax exposure can arise in more than one country, and sometimes multiple jurisdictions may have a claim depending on residence, duties, and treaty allocation.
This requires careful forward consideration of timing and residence status.
Global Payroll: Why Entrepreneurs Accidentally Trigger Multi-Country Tax
If you:
…across multiple countries, you must understand:
✔️ Payroll taxes
✔️ Social security
✔️ Employer reporting
✔️ Employee reporting
✔️ Director duties
✔️ PE obligations
✔️ Multi-country tax credits
British expats running businesses abroad may need to consider:
· UK and overseas payroll reporting
· social security coordination
· PAYE or equivalent withholding obligations
· potential shadow payroll issues
· the risk of penalties where obligations are not met
British expat entrepreneurs often misclassify themselves.
They treat themselves like:
However, classification can differ between jurisdictions and depends on the legal form of the engagement and the underlying facts.
If you provide services to a company, many countries treat you as:
Misclassification can trigger:
This is especially dangerous for:
Many entrepreneurs don’t realise that:
Countries apply withholding tax on payments made to foreign providers.
This includes:
Illustrative examples (rates depend on domestic law, treaty terms, and documentation):
If you invoice globally without understanding WHT:
Appropriate structuring and documentation can help manage withholding tax risk, subject to the relevant domestic rules and treaty processes.
Entrepreneurs who sell to customers in multiple countries must navigate:
Many British expat businesses fall into PE without realising because:
VAT and indirect tax compliance can be a significant risk area for cross-border businesses, particularly for digital services and multi-country sales.
The New 10/20 IHT Rule: Estate Planning Considerations for Entrepreneurs
From 6 April 2025, the UK applies a residence-based concept for bringing non-UK assets within the scope of inheritance tax for long-term UK residents.
Meaning:
✔️ If you were UK resident for 10 of the last 20 years
→ worldwide assets may fall within the scope of UK inheritance tax, potentially at rates of up to 40%, subject to reliefs and exemptions.
✔️ If you return to the UK later
→ your long-term residence status may change, which can affect whether non-UK assets fall within the scope of UK inheritance tax.
✔️ If you live a split-location life
→ you may meet 10/20 unintentionally.
✔️ Trust structures may lose protection.
→ Trust and estate structures may need review under the long-term residence rules, as outcomes can differ depending on timing, residence history, and the nature of the assets and transfers.
✔️ Business assets abroad may fall within scope depending on long-term residence status, structuring, and the nature of the transfer.
✔️ Share transfers may create UK inheritance tax considerations depending on the facts, reliefs, and exemption.
Entrepreneurs can face complex exposure under the new IHT system due to the size and cross-border nature of business interests.
This is a key area that many internationally mobile entrepreneurs may wish to understand in more detail.
Key considerations when running a business abroad include:
✔️ Residency (SRT + local rules)
✔️ Double Tax Treaties
✔️ PE tests
✔️ VAT & WHT rules
✔️ Investment structure
✔️ Trust/estate planning
✔️ Return planning
✔️ Salary vs dividends vs fees
✔️ Company location vs management location
Tax authorities increasingly rely on data, reporting, and information exchange.
Clarity and consistency are increasingly important.
1. Working in the UK without recognising the tax impact
UK workdays and duties performed during UK visits can be relevant for UK income tax and can contribute to Statutory Residence Test ties. Keeping clear records of days and work activity is important.
2. Running a UK Ltd from abroad without aligning management and control
Operating a UK company while living abroad can raise corporate residence questions in the UK and in the host country. Where management and control is exercised, and how decisions are evidenced, can materially affect the tax outcome.
3. Attending UK board meetings or performing director duties in the UK without considering treaty treatment
Director remuneration and related tax exposure can depend on where duties are performed and the relevant treaty wording. Board meeting locations, decision-making and supporting evidence matter.
4. Applying double tax treaties in a simplified way
Treaties allocate taxing rights differently depending on the income type and the facts. Misclassification or a superficial reading can lead to incorrect reporting, missed relief, or double taxation.
5. Selling a business, assets, or shares in a year where residence status changes
Residence status, split-year treatment, and timing of completion can materially affect whether gains fall within UK taxation. This is especially relevant for founders with large disposals or earn-outs.
6. Assuming dividends are taxed based on where you physically receive them
Dividend taxation is generally driven by tax residence in the relevant tax year, the payer jurisdiction, and the applicable treaty, rather than the physical location of the individual when the dividend is paid.
7. Using offshore or overseas bank accounts without keeping clean records and clean fund segregation
Mixed funds can create complex compliance and reporting issues, particularly where remittance-style analysis or tracing is required. Maintaining clear segregation and documentation reduces risk.
8. Having inconsistent residence narratives across HMRC, foreign tax authorities, banks, immigration filings, and company records
Inconsistencies can increase the likelihood of questions from tax authorities. A consistent, evidenced position across jurisdictions is important.
9. Ignoring long-term residence inheritance tax exposure under the 10/20 regime
Under the long-term residence rules, non-UK assets may fall within the scope of UK inheritance tax where conditions are met, potentially at rates up to 40%, subject to reliefs and exemptions. Business interests and succession planning should be considered in this context.
10. Paying contractors, staff, or founders across borders without checking payroll and withholding obligations
Cross-border payments can create payroll, withholding, and reporting obligations in more than one jurisdiction. Misclassification and missing filings can increase penalty risk.
11. Treating salary, dividends, fees and business profits as interchangeable
Different income types are taxed differently under domestic rules and treaties. Incorrect categorisation can lead to double taxation, mismatched reporting, or missed claims for relief.
12. Mixing personal and business travel without considering permanent establishment and nexus risk
Business activity undertaken in the UK (or another jurisdiction) during visits can be relevant to PE analysis and profit attribution. Travel patterns and where contracts are negotiated or concluded can matter.
13. Not reviewing trust, estate, and succession structures as residence status changes
Trust outcomes can change depending on residence history, transitional rules, and how the long-term residence regime applies. Periodic review is important, particularly before major moves or liquidity events.
14. Returning to the UK without aligning timing, residence status, and major transactions
Relocation timing can affect UK tax exposure on income, gains, equity events, and business disposals, particularly where split-year treatment does not apply. Considering tax residence alongside relocation planning can materially improve certainty and reduce risk.
Step 1: Define your intended tax residence position
Be clear on where you expect to be resident and why, and understand the UK Statutory Residence Test alongside local rules in your host country.
Step 2: Map your travel pattern and UK ties in advance
Track UK days, identify relevant ties (family, accommodation, work, 90-day, country), and plan travel so your day count and ties remain consistent with your intended residence position.
Step 3: Keep contemporaneous records
Maintain evidence of travel, workdays, meeting locations, and decision-making. In cross-border situations, documentary evidence often determines how robust your position is.
Step 4: Review how and where work is performed
For consultants, contractors, executives and directors, consider where duties are physically performed and whether this creates UK workdays, local tax exposure, or treaty reporting requirements.
Step 5: Assess permanent establishment and corporate residence risk
Consider where contracts are negotiated and concluded, where core functions are carried out, and where management and control is exercised. Align operational reality with governance, documentation, and board process.
Step 6: Structure income flows deliberately and consistently
Consider salary, bonuses, dividends, director fees, and self-employed income separately, and apply domestic law and treaty rules to each category. Avoid treating different income types as interchangeable.
Step 7: Review withholding tax, invoicing, and cross-border documentation
Where you invoice internationally, consider whether withholding tax applies, whether treaty reductions are available, and what documentation is required to support treaty claims.
Step 8: Review payroll and social security exposure
Where founders or staff work across borders, consider payroll withholding, employer reporting, shadow payroll needs, and social security coordination to reduce audit and penalty risk.
Step 9: Plan major events around residence status
Before disposals, exits, IPOs, equity vesting, option exercises, or large dividends, review residence status, split-year treatment, and the timing of completion. Ensure the structure and timeline reflect the intended tax outcome.
Step 10: Keep capital clean and avoid mixed funds issues
Maintain clear account structures and documentation, particularly where there is cross-border movement of funds, historic offshore accounts, or complex fund tracing.
Step 11: Map long-term residence inheritance tax exposure and estate planning needs
Consider how the long-term residence inheritance tax rules may apply over time, and review succession, business ownership, and asset holding structures accordingly.
Step 12: Revisit the position at least annually or when circumstances change
Entrepreneurial lives and travel patterns change quickly. A periodic review helps keep residence, governance, income flows, and compliance aligned with reality.
Running a business abroad is one of the most rewarding things a British expat can do.
It gives you:
But tax doesn’t care about your ambition.
It cares about:
Entrepreneurs are brilliant at building businesses.
But most never learn how tax works across borders.
And that’s why they get hurt.
The good news?
Many issues can be reduced or managed by understanding how residence, work location, business activity, and structuring interact across jurisdictions.
You just need to plan like a founder - not live like a passenger.
And that starts now.
This article is provided for general informational purposes only. It does not constitute tax advice, legal advice, financial advice, or a recommendation to take (or refrain from taking) any action. Tax outcomes depend on individual circumstances, the precise facts, and the law and HMRC practice in force at the relevant time (including changes announced but not yet enacted). No reliance should be placed on this article as a substitute for obtaining personalised advice from a suitably qualified professional. No professional relationship is created by reading or relying on this content.
Shil Shah is Skybound Wealth’s Group Head of Tax Planning and a Private Wealth Adviser, based in London. He works with clients who live global lives, executives, entrepreneurs, families and professionals who want clear, confident guidance on their wealth, their tax position and the decisions that shape their future.
Running a business overseas isn’t just an operational decision. It’s a tax and residency strategy. In a private introductory session with our tax team, you’ll:
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The shift from domicile-based to residence-based taxation is the biggest change British expats have faced in decades.
Your residency history will now determine whether your global estate is exposed to UK inheritance tax.
If you’ve ever lived in the UK - or you may return one day - you need to understand exactly where you stand under the new 10/20 rule and tail period.
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Running a business abroad exposes founders to overlapping residency rules, permanent establishment risk, income misallocation and exit timing traps that most expats never face.
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