tfc3000

Hi,

I am a UK / USA dual national. I lived in the UK most of my life. I moved back to the USA just over 2 years ago. I now live and work in California.

I am setup as a sole trader in the UK. However, I am not being paid through the sole tradership in the USA. I am being paid as a direct permanent employee.

For the past 2 years I filed my taxes online using HMRC self assessment. I would go through the process and there was a section about my foreign income. Which I would fill in and say that I didn't send any back to the UK (or very little). There was also a section which asked how many days I spent in the USA vs UK. Self assessment would then work out that I was a non resident. I end up owing no tax (or very little). I am also paying my NIC class 2 on a direct debit.

However, this year there was a notice when I started self assessment. Saying - if I am a non resident - then I must use 3rd party software to file my taxes . So I went ahead and checked out taxcalc.com.

My questions are:

Could I just file my taxes as a resident? I have a sole tradership setup with a UK address. The taxcalc route seems like a lot more forms and room for error.

Is there anything wrong with filing as a resident when I am technically a non-resident?

I plan to come back to the UK permanently within the next 3 years.

Pulaski

You (must) pay taxes primarily where you live and work. If you're living in the US and not paying US income and payroll taxes, the IRS would probably like to speak to you.

tfc3000

Thanks Pulaski. I am already paying tax in the USA. So back to my original question.

rpjs

Are you still getting income from your business in the UK? If not, then do you even need to file with HMRC at all? If you're not intending to return to the UK for at least three years you might as well file a P85 to "close" your UK tax affairs.

Pulaski

Your second paragraph is very confusing then, and if you're not being paid in the UK (because that is the only way I can make sense of it) I am not going to guess at what you mean. ..... That said, per Rpjs, it doesn't look like you have any reason to file with HMR&C.

tfc3000

No income from my business in the UK.

I want to continue paying my NIC class 2. So that I don't have a hole in my contribution when I return to the UK. Am I able to do this without filing a tax return each year?

There might be a chance that when I return to the UK, I will be employed and paid by a US company (setting up shop in the UK).

That's why I would rather keep my tax situation open rather than filing a P85.

rpjs

Absolutely you can. Both myself and my wife have filed P85s but continue to make voluntary NIC contributions. Although HMRC handles NIC collection, NICs and income tax are quite distinct and separate things.

ETA, and even if you don't want to file a P85 for whatever reason, if you're no longer resident in the UK and receiving no income from there, you don't need to file a UK tax return.