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-   -   Telecommuting and UK / US taxes (https://britishexpats.com/forum/moving-back-uk-61/telecommuting-uk-us-taxes-727903/)

Mecano Aug 8th 2011 7:39 pm

Telecommuting and UK / US taxes
 
OK need some input from the wealth of information you all are :)
I am moving to the UK next year, I will probably be able to convince (hoping) my company to allow me to work remotely from the UK. The question then arises about how you go about paying taxes. Since I won’t be living in the US I don’t want to pay taxes (not sure if the company can just pay me gross or if they are obligated to pay Medicare and SS). In the UK do you file as self-employed? Thus you’ll start paying tax and NI contributions there. Is this done monthly?
I have read so much information about paying Social Security here and thus exempt from NI over there etc. Enough to make your head explode!
If anybody here has a similar situation or experience it would be greatly appreciated. I would assume this problem will arise more and more as technology allows us to work remotely.
Thank you all in advance!

sallysimmons Aug 8th 2011 8:15 pm

Re: Telecommuting and UK / US taxes
 
If you live in the UK, you will pay taxes in the UK. You will have to file taxes in the US each year but probably won't owe anything as you will get a credit for taxes you pay to the UK govt. (Some people do owe in both places so check with a US/UK tax advisor).

If your company doesn't currently have any UK employees, they may not be willing to set up a UK payroll just for you. But if they do already have a team there, it will be easy to transfer you.

If you go self-employed, then they just pay you as they would pay any other sub-contractor, and you declare your earnings in the UK. Simply register as self-employed and you're good to go. If you're self-employed, you pay taxes twice a year in July.

Mecano Aug 12th 2011 7:05 pm

Re: Telecommuting and UK / US taxes
 

Originally Posted by sallysimmons (Post 9545390)
If you live in the UK, you will pay taxes in the UK. You will have to file taxes in the US each year but probably won't owe anything as you will get a credit for taxes you pay to the UK govt. (Some people do owe in both places so check with a US/UK tax advisor).

If your company doesn't currently have any UK employees, they may not be willing to set up a UK payroll just for you. But if they do already have a team there, it will be easy to transfer you.

If you go self-employed, then they just pay you as they would pay any other sub-contractor, and you declare your earnings in the UK. Simply register as self-employed and you're good to go. If you're self-employed, you pay taxes twice a year in July.

Thanks for the info

Elvira Aug 12th 2011 8:06 pm

Re: Telecommuting and UK / US taxes
 

Originally Posted by sallysimmons (Post 9545390)
If you live in the UK, you will pay taxes in the UK. ......

If you go self-employed, then they just pay you as they would pay any other sub-contractor, and you declare your earnings in the UK. Simply register as self-employed and you're good to go. If you're self-employed, you pay taxes twice a year in July.

Wouldn't he have to fill in a W8BEN to ensure that the company does not have to deduct 30% in taxes?

I am asking, not saying......... still trying to get to grips with all of this myself...

I think this question should be asked in the US forum. The UK situation is fairly straightforward - register as self-employed, pay tax and NI contributions to HMRC, and bob's your uncle. But the evil IRS will want their pound of flesh until there's proof of overseas tax residency.

sallysimmons Aug 12th 2011 11:21 pm

Re: Telecommuting and UK / US taxes
 

Originally Posted by Elvira (Post 9555514)
Wouldn't he have to fill in a W8BEN to ensure that the company does not have to deduct 30% in taxes?

I am asking, not saying......... still trying to get to grips with all of this myself...

If he is a contractor, the company doesn't withhold taxes from him. He is responsible for filing and paying his own taxes and the company pays him as they would pay any other vendor.

If his company has a UK branch, they could transfer him there and pay him from there. But if they don't and he wants to work remotely from the UK, I don't have the faintest idea what the company would have to do. Sorry!

Elvira Aug 13th 2011 12:48 am

Re: Telecommuting and UK / US taxes
 

Originally Posted by sallysimmons (Post 9555803)
If he is a contractor, the company doesn't withhold taxes from him. He is responsible for filing and paying his own taxes and the company pays him as they would pay any other vendor.

If his company has a UK branch, they could transfer him there and pay him from there. But if they don't and he wants to work remotely from the UK, I don't have the faintest idea what the company would have to do. Sorry!

Thanks, Sally, but could you cite the relevant irs source? According to form W-8BEN, "foreign persons are subject to US tax at 30% on income received from US sources that consist of .... (lots of things) .... including 'compensation for services performed'....... You must provide Form W-8BEN to establish you are not a US person...... (and) claim a reduced rate or exemption from withholding as a resident of a foreign country with which the US has an income tax treaty."

US tax is a bloody nightmare :curse:

sallysimmons Aug 13th 2011 2:54 am

Re: Telecommuting and UK / US taxes
 
I can't cite anything Elvira. I am a self-employed person who will be working in the UK for US-based clients. I am working with a specialist US-UK tax company and they are the ones who will be preparing my taxes. They have prepared an analysis for me and explained my tax obligations in both countries.

As they will be filing both my US and UK taxes, they will complete whatever forms are needed. That's why I suggested the OP contact a tax advisor. The information I gave him (that he will pay tax in the UK as a self-employed person but must also file in the US - where he will likely not owe anything - is the extent of my knowledge).

citizenmarie Aug 14th 2011 8:00 am

Re: Telecommuting and UK / US taxes
 
sallysimmons, I am thinking of doing exactly that -- keeping my US clients and trying a stint in England. Would you mind sharing the name of the company that will help file your taxes?

sallysimmons Aug 14th 2011 12:30 pm

Re: Telecommuting and UK / US taxes
 
Sure - this was the company:
http://www.fitzgeraldandlaw.com/glob...triate-tax.htm

That's the page about ex-pat taxes but I actually spoke to this guy:

http://www.fitzgeraldandlaw.com/peop...mons-short.htm

He was so kind and generous with his time. Spent over an hour on the phone with us and didn't bill us even though we asked him to repeatedly. From the website, I get the impression that they work with many much larger clients than us (we're just my husband and I) but they treated us like royalty anyway.

They apparently also take care of VAT filing if you need them to. I asked about this since most of our clients won't be VAT eligible and he said we would probably be audited because we'd be reporting income but paying very little VAT. But he said the audit would be a simple check and once they found everything in order, there would be no problem.

Good luck!

citizenmarie Aug 14th 2011 9:21 pm

Re: Telecommuting and UK / US taxes
 

Originally Posted by sallysimmons (Post 9558549)
Sure - this was the company:
http://www.fitzgeraldandlaw.com/glob...triate-tax.htm

That's the page about ex-pat taxes but I actually spoke to this guy:

http://www.fitzgeraldandlaw.com/peop...mons-short.htm

He was so kind and generous with his time. Spent over an hour on the phone with us and didn't bill us even though we asked him to repeatedly. From the website, I get the impression that they work with many much larger clients than us (we're just my husband and I) but they treated us like royalty anyway.

They apparently also take care of VAT filing if you need them to. I asked about this since most of our clients won't be VAT eligible and he said we would probably be audited because we'd be reporting income but paying very little VAT. But he said the audit would be a simple check and once they found everything in order, there would be no problem.

Good luck!

Thanks for the info... gosh I've never worked as a "grown up" in the UK. Have to look up this VAT thing. Just know it's something my dad complained aabout when I was a kid!

citizenmarie Aug 14th 2011 9:24 pm

Re: Telecommuting and UK / US taxes
 
http://www.fitzgeraldandlaw.com/glob...triate-tax.htm

Wow, nice creepy funeral parlour photos! :)

Awesome service they offer though...

penguinbar Aug 15th 2011 3:57 am

Re: Telecommuting and UK / US taxes
 
If you need someone who is an expert on UK/US taxes I highly recommend Pete Newton. www.doug-tax.com

Mecano Aug 22nd 2011 7:19 pm

Re: Telecommuting and UK / US taxes
 

Originally Posted by Mecano (Post 9545319)
OK need some input from the wealth of information you all are :)
I am moving to the UK next year, I will probably be able to convince (hoping) my company to allow me to work remotely from the UK. The question then arises about how you go about paying taxes. Since I won’t be living in the US I don’t want to pay taxes (not sure if the company can just pay me gross or if they are obligated to pay Medicare and SS). In the UK do you file as self-employed? Thus you’ll start paying tax and NI contributions there. Is this done monthly?
I have read so much information about paying Social Security here and thus exempt from NI over there etc. Enough to make your head explode!
If anybody here has a similar situation or experience it would be greatly appreciated. I would assume this problem will arise more and more as technology allows us to work remotely.
Thank you all in advance!

Thank you all for your posts. It seems that regardless, a tax advisor will be needed.
As I had understood it this is what I thought I would do: Quit as a regular employee and be transformed onto a consultant. This way no taxes are deducted in America. Since I will be a UK resident then I would pay taxes on all my earnings in the UK and file a tax return in the US claiming the allowed exemption.
Since there is a double taxation agreement I am expecting that I will only pay taxes in the UK although I'll still need to file yearly US returns as I have US nationality.


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