Do you have to pay tax on moving large sums of money UK-US?
 

Hey there.

Just wondering about the tax implications of moving money over to the US. We're living in the US but have our money in the UK. We're with HSBC and have an HSBC US and UK account. I'm wondering if we'll have to pay tax on moving money over to our HSBC US account? We've already paid taxes on the money in our UK account.

Also there is an option of my wife getting paid into her UK account from her UK based business and then us moving money across to the US account. Is that a good option? Would she pay less tax if she were to get paid US $$'s into the US account? Basically, what I'm asking is the US tax rate lower than the UK?

Cheers
B

Re: Do you have to pay tax on moving large sums of money UK-US?
 

That question is impossible to answer without more information on how much she earns, what deductions she would take etc.

With the almost constant decrease in GBP against $ since the Brexit vote, I doubt very much that she would come off better doing currency conversations frequently on income versus being paid in $ directly.

Re: Do you have to pay tax on moving large sums of money UK-US?
 

There's no tax on moving money between the UK and the US.

If your wife is a US resident then she is liable to US income tax on her worldwide income. She must pay US taxes. If she has a business based in the UK there might also be UK tax implications.

Re: Do you have to pay tax on moving large sums of money UK-US?
 

There is no tax to pay on money transfers. If you are resident in the US, then you pay tax on your world wide income in the US.

I have my UK pensions paid into my UK bank account. The one plus is I control when the money is moved, hence can pick a time when the exchange rate is to my liking. Fortunately I don't need the money for daily living expenses, so can do that.

You can take a credit for tax paid in the UK against tax owed in the US. However if the tax in the US is higher, on your UK earnings, than the UK you pay the difference in the US.

Re: Do you have to pay tax on moving large sums of money UK-US?
 

Your post betrays some fundamental misunderstandings about how taxation works in the US and the UK, and most other countries for that matter. You (everyone) is taxed based upon (i) where you are tax resident, and (ii) where you physically are when the work you are being paid for is performed. For most people, most of the time the two things coincide. For those working on temporary overseas contracts, including sports professionals, and performers things get a bit more messy.

Therefore you cannot (legally) game the taxation system by just being paid in another country from where you live and work.

To answer your headline question: "no" .... moving your money from one country to another does not necessarily create a tax liability. However under certain circumstances there may be a taxable gain because of movements in the exchange rates.

Re: Do you have to pay tax on moving large sums of money UK-US?
 

We're all assuming that your wife is allowed to work in the USA? Even if the company is UK based if your wife is working whilst in the USA, she needs work authorisation.

Re: Do you have to pay tax on moving large sums of money UK-US?
 

You and/or your wife might have information reporting in the US, such as FBAR & Form 8938.