Five things UK founders need to know before moving abroad

Many founders I work with tell me they’re thinking about leaving the UK for countries with better tax conditions, like Dubai, Portugal, or Switzerland. They often see this as a personal choice and assume their business will automatically follow.

It doesn’t work that way, though. I’ve seen founders spend months planning their move – tracking days, sorting visas, finding schools, and searching for the right home. While these are important for your lifestyle, they can distract you from the equally important question of what happens to your company. This is often how expensive mistakes start.

Your company has its own residency test

Your personal tax residence is decided by the Statutory Residence Test, which looks at things like how many days you spend in the UK and your connections here. Your company’s residence is different and usually depends on where its main management and control are based. HMRC is most interested in where key decisions are made, not just where the office or staff are.

Most of the time, a UK-incorporated company remains a UK tax resident even if you move abroad. So, your personal move does not automatically change your company’s tax status.

However, if you move and continue making all the company’s key decisions, your new country might also claim the company as a tax resident. If both countries claim it, the double tax treaty between them will determine the outcome.

To avoid this, make sure your company’s governance is set up correctly before you move. The board should have real decision-making power and be able to meet without depending on you. Otherwise, it might seem like the company’s management has moved with you, no matter what the paperwork says.

If you want the company itself to leave the UK, there is another tax issue to consider. When a company stops being a UK tax resident, it may have to pay corporation tax as if it sold its assets at market value, even if nothing was actually sold.

Most of what sits underneath the business assumes you’re staying

Bank mandates, loans, insurance, payroll, and even the shareholders’ agreement are often set up with the assumption that you are a UK resident. If that changes, banks might repeat their checks, and some banking relationships can become more complicated than you expect.

If you work as a director from another country, you might have to follow local payroll and social security rules, even if you are still employed by the UK company. Sometimes, this also means part of the company’s profits could be taxed in that country because it creates a ‘permanent establishment’.

It is easy to overlook this if the company is not moving. You might think you are only changing your personal address, but banks, insurers, or payroll providers notice when a director or owner’s location changes and may start asking about the company’s activities.

These issues do not always cause problems, but they are much easier to sort out before you move than after.

The double tax trap

The most expensive mistake I see is not failing to make a clean break from the UK, but making the break and still being taxed twice. This can happen if both countries claim the same income because residency dates, treaty rules, and transaction timing do not match up.

The UK also has temporary non-residence rules. If you leave, sell assets, take dividends and then return within five full tax years (not calendar years), HMRC can sometimes tax the income or gains you made while you were away as if you never left.

I have spoken to many founders who thought spending a few years abroad would be enough to avoid these rules, but it’s not. The rules are designed to stop people from leaving the UK for a short time, making gains, and then returning.

UK property can still be taxed after you leave, and inheritance tax may apply for up to ten years after you move away.

Timing against a raise or an exit

If you have a funding round or sale coming up, the timing of your move can be just as important as where you move.

If you relocate too close to a deal, HMRC may question whether you genuinely left the UK in time. The timing rules can be very strict. For a sale, for example, the key date is usually when the contracts become unconditional, not when the money arrives in your account.

Moving too early can also cause problems. Without the right structure in place, you could end up with a worse tax situation than if you had stayed in the UK.

The same goes for fundraising. If you plan to move shortly before or after a major transaction, you need to understand how the transaction affects your residence status instead of looking at each decision on its own.

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Founders who handle this well usually treat relocation and exit planning as one process, not as two separate decisions made a year apart.

What to sort before you speak to a lawyer

By the time most founders ask for advice, they have already chosen a country and started looking at houses. That is usually the wrong order. Before any of that, make sure you are clear on three things.

First, understand your UK ties and your realistic day count. There is no single number that works for everyone. For many founders, it is about 90 days a year, but with enough remaining ties, the limit can be as low as 15.

Second, be honest about who really runs the company day-to-day. If the answer is still you, moving abroad does not necessarily change that for tax purposes.

Third, if your plan is to reduce capital gains tax on a future sale by relocating first, make sure every step happens in the right order. Getting the sequence wrong here can be costly.

If you sort out those three things, the planning work that follows is usually much faster and cheaper. If you skip them, the process can become slow and expensive, and you might have to undo and redo decisions.

None of this is meant to discourage you from moving. Many founders relocate successfully and end up better off because they treated it as a business decision with personal consequences, not the other way around.

Work out the numbers, set up the right structure, and plan the timing before you move. That way, your move is much more likely to turn out as well as it looks on paper.