Case Study: Cross-Border Bonus Structuring for Director Remuneration Optimisation

Sector: Private Limited Company

Year-End: 31 December 2024

Key Focus: Corporation Tax Mitigation & International Compliance

The Problem

A UK-based private limited company, managed by directors with international tax residency, was approaching its financial year-end with a projected corporation tax liability of over £40,000.

One director was non-resident for UK income tax purposes, raising urgent questions about:

• How to structure remuneration across borders

• Avoiding double taxation

• Remaining compliant with UK and foreign tax laws

The company had not declared any directors’ bonuses, and time was running out to make a tax-deductible payment before the deadline. Strategic advice was required immediately.

The Solution

After assessing the company’s finances, we advised voting a £60,000 gross director’s bonus, to be paid no later than 30 September 2025.

Why?

Under the Corporation Tax Act 2009, bonuses that are:

• Voted before the year-end

• Paid within nine monthscan be treated as deductible business expenses.

The Result:

• Corporation tax saving: £14,400

• Tax liability reduced from: £40,905

• To: £26,505

This allowed the company to recognise the director’s contribution without overpaying tax.

Managing International Compliance

The director’s non-UK tax residency required detailed attention.

Key actions taken:

• Classification as employment income in the director’s home jurisdiction, with disclosure planned for their 2025 tax return, due in October 2026

• Ensured that only UK-based duties were taxed under PAYE

• The remaining portion, attributed to non-UK duties, was exempt from UK tax under non-residence rules

We:

• Apportioned the bonus between UK and non-UK duties

• Followed OECD guidelines and HMRC principles

• Prepared documentation to support the exemption claim

This safeguarded against double taxation and ensured compliance in both jurisdictions.

The Transformation

By implementing a compliant and timely bonus structure, we:

• Reduced the company’s corporation tax liability

• Delivered legitimate and tax-efficient compensation for the director

• Enabled full compliance with domestic and international tax requirements

• Prevented the risk of late payment, which would have resulted in a lost deduction and missed income opportunity

This case highlights how timing, structure, and tax residence all play a critical role in cross-border tax planning.

Are You Navigating Cross-Border Tax Complexities?

Whether your business is UK-based with foreign-resident directors or you’re a shareholder managing international exposure, we provide:

• Clarity in cross-border remuneration

• Corporate tax reduction strategies

• International tax compliance frameworks

• Tailored advice with measurable results

Contact Us

📧 Schedule your confidential consultation: info@lexefiscal.com

🌐 Visit us: www.lexefiscal.com

📞 Call us: 0208 092 2111

Let us help you structure with certainty.

Because at LEXeFISCAL, it’s not just about advice — it’s about solving your problem.

Vincent Veritas