Consequences of company migration—UK exit charges and post-migration UK tax considerations

The following Tax practice note provides comprehensive and up to date legal information covering:

  • Consequences of company migration—UK exit charges and post-migration UK tax considerations
  • UK corporation tax exit charges
  • Additional tax charges on migration—cessation of trade and end of accounting period
  • Postponement of exit charge—UK parent company
  • Postponement of exit charge—exit charge payment plan
  • Compatibility of corporation tax exit charges with EU law
  • Dual resident investing companies
  • Post-migration UK tax considerations

Consequences of company migration—UK exit charges and post-migration UK tax considerations

Migration refers to the transfer by a company of its tax residence from one jurisdiction to another. This may be done for a number of reasons. Historically, many companies migrated overseas as a way of escaping the burden of UK taxation and taking advantage of lower tax rates. This is now less of a driver given low UK corporation tax rates and exemptions for dividends and certain chargeable gains.

Alternatively, commercial factors may require a company to be incorporated in the UK but be tax resident in another country, for example because of all the directors living in that country.

For an explanation and comparison of the considerations when choosing a tax jurisdiction in which to locate the holding company of a corporate group, see Practice Note: How to choose a holding company jurisdiction—tax considerations.

In practice, there are different ways in which a UK tax resident company (or group of companies) might migrate from the UK (or reorganise itself so as to achieve a similar result from a tax perspective). As explained further in Practice Note: Company migration or corporate inversion—how to change tax residence in practice, these include:

  1. direct emigration—whereby a UK tax resident company shifts its tax residence outside of the UK, and

  2. corporate inversion—whereby a new, non-UK resident, holding company is inserted

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