UK Company vs Overseas Company: Tax and Filing Requirements
What is a UK based company?
A company is classified as being a UK based company if it mainly operates in the UK and is legally registered with Companies House. These types of companies are subject to UK company law, must pay tax on profits made from trade in the UK, and have a main registered office address within their country of incorporation (whether it be England and Wales, Scotland, or Northern Ireland).
UK Company Structures
Typically, UK based companies follow the structure of private limited companies (either limited by shares or limited by guarantee), or a limited liability partnership (also known as an LLP). These are the most common company types for small and medium companies, however, larger companies may also be incorporated as a public limited companies (also known as a PLC).
The most common UK company structures include:
- Private companies limited by shares
- Private companies limited by guarantee
- Public limited companies (PLCs)
- Limited liability partnerships (LLPs)
What is an Overseas or non UK based company?
Some companies are non UK companies (or overseas entities), operating within the UK but doing the majority of their business elsewhere. These companies can still have offices and employ people within the UK, however, the main registered address for the company is based in other country. In this case, if a company does have locations within the UK that they operate from, then they are under the jurisdiction of the UK law on the profits that they made from those trading locations. This means that they are also required to submit a corporation tax return to HMRC to declare those profits and potentially pay UK tax on them, if applicable. overseas entities
Another situation where a company may be required to submit a UK corporation tax return to HMRC is if they are a property company and own properties within the UK. While this differs from having an office or store within the UK, the company is still renting out its assets and earning rental income on a property that resides in the UK. This means that they must declare any rental income they receive and pay tax on this under UK law.
UK company vs overseas company: key differences
| UK Company | Overseas Company | |
| Place of Incorporation | Incorporated in the UK | Incorporated outside the UK |
| House registration | Normally registered as a UK company | May need to register if it establishes a UK place of business |
| UK Corporation Tax | Generally applies to UK-resident companies | May apply where there is a UK permanent establishment, UK property income or other relevant UK activities |
| Worldwide profits | UK-resident companies are generally subject to Corporation Tax on worldwide chargeable profits | Generally depends on UK tax residence, UK activities and applicable tax treaties |
| Companies House filings | Annual accounts and confirmation statement generally required | Filing requirements depend on the UK establishment and the company's home-country accounting requirements |
| Tax residence | Generally determined under UK residence rules | Can be UK resident in certain circumstances despite being incorporated overseas |
Statutory Filings for Overseas Entities with UK Business Interests
Filing requirements in the UK
There are a few differences between statutory filing requirements for a UK based company vs non UK based company, when submitting their annual returns to HMRC and Companies House in the UK.
For example, UK based companies are required to submit their annual confirmation statement and annual accounts to Companies House, however, overseas entities do not have to submit either of these filings, even if they are registered on Companies House. The reason that they are registered on Companies House is just to comply with the UK law, which requires transparency from companies that operate some of their trade in the UK and also displays their registered office address so that HMRC, or others, can still contact them.
However, when it comes to filing to HMRC, the requirements for UK companies and overseas entities are very similar. Both types of entity are required to submit the CT600 corporation tax return with full accounts (which include an income statement and balance sheet) in iXBRL format, to HMRC.
This also means that they both need to have government gateway accounts with the corporation tax service activated within them as well, in order to submit. This can be a bit trickier for overseas entities, as they still have to request access to corporation tax within their gateway account. This code is sent by post to the company’s registered address, and when overseas, can take 2 to 8 weeks to arrive (rather than the standard 10 days for UK based entities).
If You are non UK entity: It is important that you ensure you request the access code early enough before your filing deadline, so that it arrives in time for submission, as you cannot submit until this has been done. Find out more on how to activate the corporation tax service in your company’s gateway account.
Overseas Entities and Corporation Tax
There is one other major difference between filing for UK based vs overseas entities, and that is the corporation tax rate that is charged on their profits. UK based companies are subject to the main rate of 25%, which is charged on taxable profits over £250,000. However, there are also other taxation reliefs in place, such as the small profits rate, which is where a company is charged tax on profits under £50,000, and marginal rate relief, which is where a company is charged at 25% but then is offered a tax reduction if their profits are between £50,000 and £250,000. You can find out more on how this works in our article ‘Corporation Tax Rates Explained (Small Profits, MRR, Main Rate)’ in our Knowledge Base.
However, the downside for overseas entities is that they are charged at the main rate of 25% and are not eligible to the small profits rate or marginal rate relief. This means that any profits they make, no matter how small, are always charged at 25%, which can lead to quite a big difference in the amount of tax due compared to a UK based company.
Double Taxation Relief
In some cases, a company may be taxed in two location, for example if it is registered in the UK but it also earns profits from trade it conducts in France. In this case, even though you are a UK based company, you may be taxed on those profits by France, since the income was earned there. Then, as you are a UK based company, you still need to declare your company’s profits on your UK corporation tax return that is submitted to HMRC, so you would then be taxed on those same profits again.
However, to avoid this from happening, you can claim something called double taxation relief, which is where you claim relief from the total tax due on your UK profits if you already paid tax in the country where the income was received. You can find out more on this through our article ‘What is Double Taxation Relief and How to Claim it?’ from our Knowledge Base.
