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Assignment from the UK onto US payroll

Assignment from the UK onto US payroll

Old Nov 12th 2017, 3:02 pm
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Default Assignment from the UK onto US payroll

I thought I'd make a separate thread as I have some concerns about how my employment transfer is progressing.

I've made a previous post about generally moving to the US, however I'm wondering if anyone else has been in a similar situation.

I'm moving to the US for a 1 year assignment with an L1B visa, moving from the UK branch of the company to the US branch. They're moving me from the UK payroll to the US payroll. Because of this, I've been asked to do a lot of things manually. For example, I'll have to pay into my pension plan directly and my student loan. They have yet to sort out my medical insurance, so for now I'm going to be on a 30 day travel insurance that covers as much as possible until I'm switched over. Paying into my pension and student loan shouldn't be too hard, they'll increase my salary to account for the employer pension contributions and the salary sacrifice. I'll also be paying into the US social security system (FICA payments) rather than national insurance. I cannot do anything regarding crediting it back through the Totalization Agreement between the 2 countries as I am working for a US company and residing in the US... I've been told I can sort this out 6 months before I retire - which I think seems pretty odd. So that seems like potentially a years income going into a system that I won't use at all - seems like a huge waste.

Alongside this the company in general does not seem prepared for this kind of move - it's the first transfer they've done. Alas, we're making it up as we go. We've sought some professional advice but we're not hiring anyone specifically as it's too expensive (apparently). I'll get help with processing my tax requirements in the US and UK in the same way, apparently.

Has anyone been in a similar situation? It's been a lot of stress on my end, this has been a very long process. Does this seem reasonable? They've tried to be as accommodating whenever I find any issues (relocation budget etc), but this is only initiated when something comes up... I'm concerned about the issues that I haven't considered.

Thanks

Last edited by lylat; Nov 12th 2017 at 3:20 pm.
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Old Nov 12th 2017, 4:27 pm
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Default Re: Assignment from the UK onto US payroll

The only time I have heard of either not paying into Social Security and Medicare and/or getting a rebate when leaving is someone on a J-1 visa.

You are on an L-1 visa and will pay Social Security and Medicare payments from your salary. They will not be refunded when you leave. They will go towards your pension and Medicare eligibility regardless of whether or not you are still in the States to receive them.

Think of them like NIC contributions in the UK.

I don't understand what type of pension you are talking about - is this a private one? As you are on the US payroll, if there is a company pension plan why can't they pay into that for you?

Student loan? From the UK? Yes, you would need to sort that out yourself.
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Old Nov 12th 2017, 4:56 pm
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Default Re: Assignment from the UK onto US payroll

Originally Posted by SanDiegogirl View Post
The only time I have heard of either not paying into Social Security and Medicare and/or getting a rebate when leaving is someone on a J-1 visa.

You are on an L-1 visa and will pay Social Security and Medicare payments from your salary. They will not be refunded when you leave. They will go towards your pension and Medicare eligibility regardless of whether or not you are still in the States to receive them.

Think of them like NIC contributions in the UK.

I don't understand what type of pension you are talking about - is this a private one? As you are on the US payroll, if there is a company pension plan why can't they pay into that for you?

Student loan? From the UK? Yes, you would need to sort that out yourself.
Regarding the social security / medicare: I was hoping to be able to use the totalization agreement: https://www.ssa.gov/international/Ag...phlets/uk.html
If I was under the UK payroll I would be considered as being paid by a UK company (which was initially the plan), and therefore I would have been able to use the totalization agreement to get credit towards my national insurance record... I think that's how it works anyway. So it seems now that it's decided that I'm being paid from the US payroll (the US company instead) that this would not be possible and my money will be "lost" in the world of US Social Security etc.

Regarding the pension plan, yes it's a private UK company pension plan. I have been told the US branch of the company cannot pay into that pension plan for me, as such I will have to pay into it directly myself. I'll double check with them on this as it does seem a bit odd.

Student loan: gotchya, as I thought.

Is there anything else that I'm not considering?

Someone has already mentioned that I will be taxed for my relocation allowance, which the company did not mention - they said this would be classed as a business expense. I'm planning on having this grossed up to account for the tax etc.

I believe I have to fill out a P85 to let HMRC know when I am leaving the UK (and not receiving any income) so that I can receive the appropriate tax refund.
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Old Nov 12th 2017, 5:01 pm
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Default Re: Assignment from the UK onto US payroll

I am not sure that you will be able to pay into a UK private pension if you aren't a UK tax payer - in fact I think you cannot.
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Old Nov 12th 2017, 5:03 pm
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Default Re: Assignment from the UK onto US payroll

You know more about the totalisation agreement than I do, so, if you think this will get you credit or any other tax perk, then look into this further.

My fellow UK workers who were on a US payroll, paid SS and Medicare payments (as did I) and paid voluntary contributions into the UK NIC scheme in order to keep up to date with that.

Correct on the taxing of some relocation monies (don't ask me when and how these are taxed - it was a long time ago that I transferred)
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Old Nov 12th 2017, 5:17 pm
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Default Re: Assignment from the UK onto US payroll

Originally Posted by SanDiegogirl View Post
You know more about the totalisation agreement than I do, so, if you think this will get you credit or any other tax perk, then look into this further.

My fellow UK workers who were on a US payroll, paid SS and Medicare payments (as did I) and paid voluntary contributions into the UK NIC scheme in order to keep up to date with that.

Correct on the taxing of some relocation monies (don't ask me when and how these are taxed - it was a long time ago that I transferred)
I see - do you know if that's something that employees being relocated on assignments usually ask to be covered by their salary?

Originally Posted by Pulaski View Post
I am not sure that you will be able to pay into a UK private pension if you aren't a UK tax payer - in fact I think you cannot.
I can't pay into my UK pension plan...? That's not something I've heard, will look into it. Thanks

Last edited by lylat; Nov 12th 2017 at 5:29 pm.
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Old Nov 12th 2017, 5:29 pm
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Default Re: Assignment from the UK onto US payroll

Originally Posted by lylat View Post
I see - is that something that employees being relocated on assignments usually ask to be covered by their salary?



l
I don't think I did .... but then I was going on a permanent move.

Sorry, can't be of further help, you'll just have to enquire as to your US payroll department what, if anything, of your relocation package could be taxed.

Personally, I was only too glad to be getting a good relocation package
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Old Nov 12th 2017, 5:31 pm
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Default Re: Assignment from the UK onto US payroll

This might help:

Get the Most out of Employee Relocation Packages | Taxes and Household Moving | Holman Moving | United Van Lines
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Old Nov 12th 2017, 5:45 pm
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Default Re: Assignment from the UK onto US payroll

Originally Posted by SanDiegogirl View Post
I don't think I did .... but then I was going on a permanent move.

Sorry, can't be of further help, you'll just have to enquire as to your US payroll department what, if anything, of your relocation package could be taxed.

Personally, I was only too glad to be getting a good relocation package
Ah I meant more about the voluntary NIC contributions that your friends continued.

That link is useful though, thanks!
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Old Nov 12th 2017, 5:50 pm
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Default Re: Assignment from the UK onto US payroll

Originally Posted by lylat View Post
Ah I meant more about the voluntary NIC contributions that your friends continued.

That link is useful though, thanks!
If you're only going to be working abroad for one year or parts of two tax years you may not need the voluntary NIC. By the time you retire you may have met or exceeded the number of years work needed for the full pension.
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Old Nov 12th 2017, 5:59 pm
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Default Re: Assignment from the UK onto US payroll

Originally Posted by lylat View Post
Ah I meant more about the voluntary NIC contributions that your friends continued.

That link is useful though, thanks!
With regard Voluntary contributions - no.

No harm in asking your employer though if they are prepared to fund it - however, there is a point when asking for every eventuality to be covered, where you are appearing to be rather greedy !
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Old Nov 12th 2017, 6:32 pm
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Default Re: Assignment from the UK onto US payroll

Originally Posted by SanDiegogirl View Post
With regard Voluntary contributions - no.

No harm in asking your employer though if they are prepared to fund it - however, there is a point when asking for every eventuality to be covered, where you are appearing to be rather greedy !
No I agree - it's just that as it's new to the company, I have no idea whether my offer is actually a reasonable one. I had to push for a relocation budget of any sort, for example. Asking for an employee to make a move and ask for them to incur all of the expenses seems unreasonable. But I agree, there needs to be a balance and I'm working on that as we speak
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Old Nov 12th 2017, 7:00 pm
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Default Re: Assignment from the UK onto US payroll

Originally Posted by lylat View Post
No I agree - it's just that as it's new to the company, I have no idea whether my offer is actually a reasonable one. I had to push for a relocation budget of any sort, for example. Asking for an employee to make a move and ask for them to incur all of the expenses seems unreasonable. But I agree, there needs to be a balance and I'm working on that as we speak
I think that the general principle for a 1 year temporary assignment which, presumably, the company has asked you to do is that your total benefits package for that year should be structured so that you are no worse off at the end of the assignment (in terms of compensation, pension, seniority etc) than you would have been had you remained in the UK.

You really also want a relocation package that doesn't leave you out of pocket and provides some additional compensation to you for the inconvenience of being in the US for 12 months. (Note that, if you are on the US payroll you will presumably also be getting the US vacation allowance which, unless the US organization credits you for your years of service with the UK company, could turn out to be very little)
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Old Nov 12th 2017, 7:36 pm
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Default Re: Assignment from the UK onto US payroll

Originally Posted by md95065 View Post
I think that the general principle for a 1 year temporary assignment which, presumably, the company has asked you to do is that your total benefits package for that year should be structured so that you are no worse off at the end of the assignment (in terms of compensation, pension, seniority etc) than you would have been had you remained in the UK.

You really also want a relocation package that doesn't leave you out of pocket and provides some additional compensation to you for the inconvenience of being in the US for 12 months. (Note that, if you are on the US payroll you will presumably also be getting the US vacation allowance which, unless the US organization credits you for your years of service with the UK company, could turn out to be very little)
You are correct, the idea was that I would not be any worse off. However my salary etc has been bumped up relatively to the US and I negotiated to keep my UK holiday allocation, alongside the US bank holidays - which is great. The issue I'm having is that it's difficult for me to know if I would be any worse off if I haven't considered particular issues. For example, the relocation budget was to cover my costs, but if I will be tax'd for this (which I've only recently discovered), I would be taking a hit. This alongside it being the company's first transfer and being rushed through everything, has left me somewhat anxious.
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Old Nov 12th 2017, 9:26 pm
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Default Re: Assignment from the UK onto US payroll

One way around the relocation allowance taxation thing is that all expenses (temporary rent of accommodation/rental car etc) goes direct to the company?

You then get the benefit but are not out of pocket.

Someone reminded me that any contributions you make to the US Social Security system can, in circumstances, be taken into consideration when you apply for your UK state pension.
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