Non-Resident Director of a UK Company: How You Are Taxed

Yes. A non-resident person can be a director of a UK company, and UK company law imposes no residence or nationality requirement for directors. A company registered at Companies House must have at least one director who is a natural person, but that person can live in any country. Many UK companies are run entirely by directors based overseas.

Holding the office abroad does, however, raise three separate questions that people often blur together. The first is how you, as an individual, are taxed on what the company pays you. The second is National Insurance, which follows a different set of rules from income tax. The third is whether your presence and decision-making abroad affect the company itself, for example its residence or whether it creates a taxable presence in your country. This guide deals mainly with the first two, and flags the third where it matters.

One practical point to settle early: where the central management and control of a UK-incorporated company actually sits can affect the company's tax residence, and running board decisions from another country can in some cases give that country a claim over the company's profits. If the board has genuinely moved abroad, this is worth checking before it becomes a problem rather than after.

Generally yes, to the extent the fees relate to UK directorship duties. HMRC treats fees received for acting as a director of a UK company as employment income, and the duties of a UK directorship are regarded as performed where the company is, which means the UK. So even a director who is not resident in the UK is chargeable to UK tax on the earnings from those duties. Most UK double tax agreements reinforce this: under the directors' fees article, fees paid to a director of a company resident in one country may be taxed in that country, regardless of where the director lives.

This is the point that catches people out. A non-resident employee is usually taxed in the UK only on duties physically carried out in the UK. Directors' fees sit outside that comfort zone, because the directorship duty is tied to the company's location, not to where you happen to be sitting when you sign the board minutes. The short-term business visitor arrangements that exempt many visiting overseas employees from UK tax specifically do not cover directors of the UK company.

There is relief on the edges. Where a director performs both directorship duties and genuinely separate employment duties (for example day-to-day operational work done entirely abroad), the earnings can usually be apportioned, with only the UK-duties part taxed here. HMRC accepts a time-apportionment by reference to days worked in and out of the UK, except where that would clearly be inappropriate. Getting the split right, and documenting it, is where most of the value lies for an overseas director.

The UK company must generally operate PAYE on a non-resident director's earnings for UK directorship duties, deducting income tax before payment. PAYE is the company's obligation, not yours, and it applies even though you live abroad. The company should set up a payroll record for you and report your pay in real time, just as it would for a UK-resident director.

Where part of your earnings relates to duties performed outside the UK, that part should not bear UK tax. From 6 April 2025 this is handled through a section 690 notification: the company tells HMRC online the proportion of your pay it expects to relate to overseas duties and then operates PAYE only on the UK part, with the position finalised through Self Assessment. This notification process replaced the older section 690 direction, and any direction issued before 6 April 2025 has ceased to have effect, so a fresh notification is needed for the current year. The mechanics matter less than the principle: the UK taxes the slice tied to your UK directorship, and the rest should fall away if it is genuinely for separate overseas duties.

Two further points are worth holding onto. First, as a non-resident with UK director earnings you will usually need to file a UK Self Assessment return, which is also where any apportionment, double tax relief and personal allowance claim are pulled together. Second, whether you can still claim the UK personal allowance of 12,570 pounds against this income depends on your status: British and other EEA nationals can claim it, as can residents of many countries under the non-discrimination or personal allowance provisions of the relevant treaty. If you are entitled, the first 12,570 pounds of taxable income is free of UK income tax.

Worked example, hypothetical. Priya is resident in Singapore and a director of a UK trading company. She is paid 30,000 pounds a year in director fees and attends a handful of UK board meetings. All of it relates to her UK directorship, so the company operates PAYE on the full amount. Assuming she is entitled to the UK personal allowance, the first 12,570 pounds is covered and the remaining 17,430 pounds is taxed at 20 percent, giving roughly 3,486 pounds of UK income tax, before any treaty relief in Singapore for the same income. The figures are illustrative only.

National Insurance is decided separately from income tax and follows the social security rules, so a non-resident director can owe UK income tax but no UK National Insurance, or the reverse. The starting point is where you are insured. If you are covered by the social security system of a country that has an agreement with the UK (for example through an A1 certificate or a certificate of coverage), that certificate generally keeps you contributing in one country only and out of UK NIC on the director earnings.

For directors whose only UK activity is attending board meetings, HMRC operates a narrow concession that can keep them outside UK National Insurance even without an agreement. Under the concession, no UK NIC arises on the director where, in the tax year, the director attends no more than 10 board meetings in the UK and each visit to the UK lasts no more than 2 nights, or attends only 1 board meeting in the UK and that single visit lasts no more than 2 weeks. The conditions are strict and HMRC applies them literally.

• The limits are measured per tax year, not per calendar year, and they are not multiplied if you hold more than one UK directorship.
• Visits cannot be averaged: an 11th board meeting breaks the concession even if every trip was a single night.
• Attending board meetings must be the only work you do in the UK; doing other UK duties takes you outside the concession.
• The concession does not apply at all if you are within the scope of a UK social security agreement, because that agreement already decides where you contribute.

Where neither a certificate of coverage nor the concession protects you, UK Class 1 National Insurance can become due on the director earnings through the company's payroll, with employee contributions for 2026/27 charged at 8 percent on earnings above the primary threshold of 12,570 pounds, and employer secondary contributions at 15 percent above the 5,000 pound secondary threshold. Pinning down the right social security outcome before payroll runs is far cheaper than unwinding it later.

Dividends are taxed far more gently than fees for a non-resident, and they carry no UK withholding tax. A UK company pays dividends without deducting any tax at source, so nothing is stopped before the money reaches you abroad. What happens next depends on the disregarded income rules for non-residents.

UK dividends are disregarded income for a non-resident. Under these rules your total UK income tax liability is capped: broadly, it cannot exceed the tax on your non-disregarded UK income (such as UK rental or director fees) worked out without the personal allowance, plus the tax actually deducted at source from the disregarded income. Because dividends carry no tax at source, the practical effect is often that a non-resident pays little or no extra UK tax on UK dividends. The trade-off is that invoking the cap means giving up the personal allowance against your other UK income, so the two calculations have to be compared.

HMRC effectively lets you take the better of two outcomes. The first is to be taxed broadly as if UK-resident, keeping the personal allowance and paying the normal dividend rates on the dividends. The dividend allowance for 2026/27 is 500 pounds, and dividends above it are taxed at 10.75 percent in the basic-rate band, 35.75 percent in the higher-rate band and 39.35 percent in the additional-rate band. The second is to apply the disregarded income cap, which can wipe out UK tax on the dividends but costs you the personal allowance elsewhere. Which wins depends on the size and mix of your UK income, so this is a calculation to run, not a rule of thumb.

Two cautions. First, your country of residence will usually tax the dividend under its own rules, and double tax relief, not exemption, is the typical result, so look at both sides. Second, the disregarded income rules interact with the salary-versus-dividend split below, which is why the two decisions should be made together rather than in isolation.

The salary-versus-dividend balance shifts once you become non-resident, because PAYE bites on UK director duties while dividends often do not. For a UK-resident owner-director the usual answer is a small salary up to the National Insurance thresholds plus dividends. For a non-resident director the same logic does not automatically hold, because the part of any salary that pays for UK directorship duties is taxable in the UK regardless of where you live, whereas dividends can fall under the disregarded income cap.

Several factors push the decision in different directions, and they are genuinely country-specific:

• UK side. Director fees for UK duties are taxable here and bear PAYE; dividends carry no withholding and may be capped to nil under the disregarded income rules.
• National Insurance. A certificate of coverage or the board-meeting concession can remove UK NIC on salary, but without them salary can attract both employee and employer contributions that dividends never do.
• Company tax. Salary is deductible for the company against corporation tax; dividends are paid from taxed profits, so the comparison is not just about your personal position.
• Your home country. Many countries tax salary and dividends differently, and the available double tax relief differs too, so an outcome that looks efficient in the UK can be undone abroad.
• Substance and treaty. How your fees are characterised, and where board decisions are taken, can affect both your personal treaty position and the company's own residence and exposure.

Worked example, hypothetical. Tom lives in Portugal and owns a UK company. If he takes 12,570 pounds of director fees, it relates to UK duties, so PAYE applies and only the personal allowance (if he qualifies) shelters it; the same sum paid as dividends might instead fall under the disregarded income cap and bear little UK tax, though Portugal would then tax the dividend under its rules. The right mix depends on his Portuguese position as much as his UK one, which is the whole point: this is a two-country sum, and the figures here are illustrative only.

This is the heart of why cross-border directorships need joined-up advice. The UK answer and the home-country answer have to be solved together, alongside the National Insurance and company-residence questions. We work through exactly this calculation for overseas directors on a fixed fee, so you know the cost before any work starts.