elop

Hi all,

for those of you who remember my original thread I was considering a role in California. I have since been offered the role, made some negotiations and accepted. If all goes well with the visa process I will hopefully be starting on 1st October.

So this leaves me a little time to start thinking about money, taxes, and other things.

I have a small business in the UK, which I intend to keep running. It is all online, so can be run from anywhere in the world. I would also have a house (where I am currently living) which I intend to rent out while I'm gone.
So that's 2 sources of income in the UK, one into a business account, and the other to a personal account.

Obviously while I am in the US I am working there (just the one source of income).

My question is would I need to declare the money I make in the US to the UK taxman, or the money I make in the UK to the US taxman?

Would it depend on whether I move the money from country to country? The money I would be making in the UK wouldn't be that much, so would be used to pay off the mortgage and for spending money when we go back to the UK. I wouldn't move any money from US to UK until/unless I move back to the UK permanently, so not yet a concern.

Anything I need to be aware of?

nun

Well yes

The US taxes residents on their worldwide income so you must declare US and UK income to the US taxman. If you are non UK resident the UK will only tax your UK income.

You will need to figure out foreign tax credits and file taxes in both the UK and the US. If you have any UK investments like stocks and shares ISAs or unit trusts it would be best to sell them before moving to the USA to avoid the tax filing requirements on them and you should understand how the US and the UK/US tax treaty deals with any UK pension plans you have.

ian-mstm

In case it hasn't come up yet... you can't work for your UK business while you're in the US. Your H-1B visa allows you to work only for your US sponsor. You are not allowed to work for yourself or anyone else.

Ian

Noorah101

Hopefully you will be leaving behind someone in the UK to do the online business while you're in the USA. While you are physically inside the USA, you cannot work for anyone (including yourself) except your H1B employer.

When you physically go back to the UK on vacations and such, then you can work for your UK business.

You can still earn the income from the UK business, which you'll claim on your US tax return as worldwide income, but someone else must do the actual work.

Rene

elop

Right, but as someone mentioned I can still work when I'm visiting the UK without any issues. One question though - what actually constitutes "work"?
So I send emails to customers, and to contractors based around the world and I write invoices at the end of each month/quarter - this is obviously work. However, how is this different to me giving a friend advice, or perhaps contributing to an opensource project. In both cases the requirements are the same, but one is seen as work and the other is not.

No one has mentioned anything anything about rental income. Is this not an issue? I'm guessing it counts as an investment?

My wife will be joing me in the US, on a spouce visa - although she is not allowed to work in the US, is she allowed to do work for the UK whilst in the US?
Failing that I will be leaving behind some familiy in the UK so perhaps something can be worked out there.

ian-mstm

Ah... now you're engaging in that classic chess move... the "Will I get caught?" gambit (sometimes referred to as the "How will they know?" gambit).


No, she isn't.


Sounds like a plan, then!

The US isn't interested in whether or not your activities are an inconvenience for you! You need to make hard choices... make them good ones!

Ian

Noorah101

You are allowed to collect rental income while you are in the USA. Yes, it's income, and you will claim it on your US tax return. It does not count as an investment, it counts as income.

No.

Rene

Vicky88

Also you need to remember if your income is too high you will not be able to claim any loss you have on your UK property.

nikkisizer

Hi Elop, Under UK taxation rules you have to declare on your UK tax return the income from your business and the rental income from your property. This may well lead to double taxation from both the UK and US so you may be able to claim exemption or partial relief from UK tax depending on your circumstances. Also, it is worth bearing in mind that if you have been resident in the UK, go to live abroad and then return to the UK at a later date which is less than five full tax years since your date of departure you will be classed as "temporarily non resident". This means that any foreign income that you remit to the UK during the time of your non residency WILL be chargeable to UK tax in the year you become a UK resident again. This rule will apply if you were resident in the UK for at least four of the last seven tax years before you left. I would advise you to tread carefully, prevention is better than cure as they say!