Director Remuneration Strategies for Internationally Mobile Company Owners

How you take money out of your company is one of the most significant tax planning decisions you make each year. For owner-managed businesses, the choice between salary, dividends, pension contributions, benefits in kind and other mechanisms can make a material difference to the total tax paid on the same underlying profit.

For internationally mobile directors — those who live outside the UK, or who have recently relocated, or who are planning to — the analysis is more complex, because the optimal remuneration structure in one jurisdiction may not be optimal in another. This guide walks through the main options and how the picture changes across jurisdictions.

Tax rules change. The rates and rules cited in this guide are based on information available to mid-2026 and may have changed. Always take independent tax advice specific to your circumstances.

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The UK Baseline: Salary vs Dividends

For UK tax resident owner-directors of UK companies, the conventional wisdom is to take a low salary and extract the remainder of needed income as dividends. The logic is:

Salary above the National Insurance (NI) primary threshold incurs both employee NI (currently 8% between primary and upper earnings limits) and employer NI (15% above the secondary threshold of £5,000 since 6 April 2025). This double NI charge means taking a large salary is expensive — roughly 23% in NI charges alone, before income tax.

Dividends attract no NI and are taxed at the dividend income tax rates (currently 8.75% / 33.75% / 39.35% for basic/higher/additional rate taxpayers) rather than the income tax rates that apply to salary (20% / 40% / 45%). The dividend rates are lower than income tax rates at every band.

The common approach:

• Take a salary up to the primary threshold (approximately £12,570 per annum at recent rates — sufficient to maintain NI contribution record with minimal NI cost)
• Extract additional income as dividends from distributable reserves
• The dividend allowance (£500 in 2026/27 — reduced significantly in recent years) provides a small tax-free amount on dividends

Important caveats:

• To make pension contributions via the company or personal contributions, you need earned income (salary). Very low salary limits pension input amounts.
• If you have other income sources, the personal allowance and basic rate band may already be used — the optimal salary level depends on total income.
• The company must have distributable profits (retained profits) to pay dividends. New businesses without accumulated reserves cannot immediately pay dividends.

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Pension Contributions as a Director

Pension contributions are one of the most tax-efficient forms of director remuneration and are frequently underutilised.

Company pension contributions: Contributions from the company into a director's pension are:

• Generally allowable as a corporation tax deduction (reducing the company's tax bill)
• Not subject to income tax when paid (unlike salary)
• Not subject to NI

This makes company pension contributions effectively corporation-tax-exempt for the company and income-tax-exempt for the director (subject to the annual allowance limits).

Annual allowance: the limit on tax-relieved pension contributions is currently £60,000 per annum (including employer and employee contributions). For directors with historic unused allowances, carry-forward can allow larger one-off contributions. The money purchase annual allowance (MPAA) of £10,000 applies once you have flexibly accessed pension benefits — a trap for directors who have started drawing from pensions early.

Lifetime allowance: the lifetime allowance charge was removed from 6 April 2023 and the lifetime allowance was fully abolished from 6 April 2024. Individuals no longer face a lifetime cap on pension savings in the same way, but two new lump sum limits apply: the Lump Sum Allowance (£268,275) and the Lump Sum and Death Benefit Allowance (£1,073,100).

For internationally mobile directors: pension contributions and fund growth within a UK registered pension scheme are tax-advantaged in the UK, but how the pension is treated on drawdown in the country of residence at the time of drawing benefits varies. Under some double tax treaties, UK pension income is taxable only in the UK; under others, it may be taxable in the country of residence. This must be assessed when planning a pension contribution strategy alongside a relocation plan.

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Relevant Life Policies: Death-in-Service for Directors

For directors seeking tax-efficient life cover, a relevant life policy is a valuable and often overlooked tool.

Structure:

• The company arranges a life assurance policy for the director (it must be for an employee/director, not a sole trader)
• The company pays the premiums
• Premiums are generally allowable as a corporation tax deduction
• The benefit is paid into a discretionary trust for the director's family or dependants
• The benefit sits outside the director's estate for IHT purposes

Key advantages over a personal life policy:

• Premium cost is borne by the company (pre-tax), rather than from post-tax personal income
• The benefit is not added to the director's total pension savings (unlike death-in-service arrangements under a registered pension scheme, relevant life policies are not tested against the pension annual allowance)
• The IHT efficiency of the trust structure

Limitations:

• Must be a genuine employment relationship — sole traders and equity partners cannot use relevant life policies
• The policy must insure the director's life only (no critical illness or income protection under the same policy)
• The arrangement must be at arm's length and reasonable relative to the director's role

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Non-UK Resident Directors: How the Picture Changes

When a director becomes non-UK tax resident, the analysis of optimal remuneration changes significantly.

Salary: Salary for activities carried out in the UK remains subject to UK PAYE and NI, regardless of the director's residence. Salary for activities carried out entirely outside the UK may not be UK taxable — but HMRC requires clear evidence that the work was done abroad if this position is to be maintained. For directors who are "visiting" the UK regularly whilst non-resident, the split of income between UK and non-UK duties must be tracked carefully.

Dividends: UK dividends paid to non-UK residents are generally subject to a UK withholding tax under treaty provisions. The UK does not impose domestic withholding tax on dividends in most cases (unlike interest), but double tax treaties may still give the UK taxing rights on dividends. The rate under treaty is typically 0–15% depending on the specific country. The director's country of residence may also tax the dividend — though a credit for UK tax may be available.

Pension: Company pension contributions made whilst the director is non-UK resident may or may not be tax-relievable in the UK, depending on whether the director has UK earnings. Once non-UK resident, contributions beyond UK earnings level may not attract UK tax relief. The country of residence may offer its own pension equivalent — in the UAE, for example, workplace savings plans are separate from UK pension structures.

Tax residency of the company: If the director is the primary manager of the company and has relocated abroad, there is a risk that the company's central management and control is now considered to be abroad, which could affect its UK tax residency. This should be reviewed with a corporate tax adviser when a key director relocates.

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EMI Options: For UK Employee Retention

Enterprise Management Incentive (EMI) options are a UK-specific scheme allowing qualifying companies to grant employees (including executive directors) options to acquire shares at CGT rates rather than income tax rates.

Key features:

• Options can be granted at a discount to market value (or at market value)
• No income tax or NI arises on grant, and typically none on exercise (provided HMRC approval and qualifying conditions are met)
• CGT applies on ultimate disposal — at the time of writing, BADR may apply on EMI option shares; the BADR rate is 18% for 2026/27 (having risen from 10% up to April 2025 and 14% in 2025/26), subject to the £1m lifetime limit
• Available to companies with gross assets below £30m and fewer than 250 full-time equivalent employees

EMI is specifically useful for owner-directors who want to incentivise management or employees — it is not typically used by the primary owner themselves (who already holds ordinary shares) but can form part of a remuneration package for senior employees, key hires, or as part of an MBO preparation.

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Restructuring Remuneration After Relocation

If you have recently relocated from the UK (or are planning to), your remuneration structure should be reviewed:

Immediate actions:

• Notify your payroll provider of your non-UK residence status — implications for PAYE, NIC and withholding
• Review whether your pension contributions remain optimal given the change in tax residence
• Assess the dividend withholding tax position under the relevant double tax treaty

Medium-term actions:

• Review the company's management and control position — if you are the primary decision-maker and you are now abroad, update board meeting procedures
• Consider whether the company's structure still serves your objectives, or whether a new vehicle (UAE FZCO, Cyprus holding company) would be more appropriate
• Review relevant life policy arrangements — these should remain valid if the employment relationship continues, but confirm with the insurer

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How Global Investments Can Help

Global Investments has over 32 years of experience advising internationally mobile, high-net-worth individuals and business owners on remuneration planning and tax efficiency. We work with UK-qualified and internationally experienced tax advisers to help clients structure their director remuneration efficiently — at the outset, after a relocation, or as part of an ongoing planning review.

We take a holistic view: remuneration strategy, pension planning, life cover arrangements and corporate structure should work together as an integrated plan, not be considered in isolation.

Contact us to discuss your remuneration arrangements in confidence.