cheryl7

Hi all,

Just a quick question: we are planning on moving back to the US in a year or so and my husband has provisionally arranged something with his employer here in the UK whereby when we move, he will basically work remotely for the UK company from our home in the US. I just wanted to ask what the tax consequences will be of this?

Will his income be liable to US as well as UK taxes? If so, it seems pretty silly for him to keep the UK job, but on the other hand the job pays really well.

Any insight is greatly appreciated. Thanks!

Cheryl

Elvira

Check out the tax forum at www.uk-yankee.com

chartreuse

Also, this came up recently on here (a search should find it).

IIRC, so long as he's doing no or "mereley incidental" work in the UK, HMRC'll give hin a non-res tax code and his firm will pay him gross, then he'll pay US tax as normal. He can take care of it on the P80-something that he'll fill in when he leaves.

I'm not clear about how the NI/Social Security thing works though. He'll need to sort that out or get stung for about 15% self employment tax.

penguinsix

This is a bit trickier than it might appear at first blush. I'm not a tax attorney but this comes up quite frequently and I wish we had a wiki that was more authoritative on working in the US paid in the UK.

If you are living and working in the US, it really doesn't matter where you get your paycheck from--you are working in the US and subject (and more importantly, your employer is subject to) US tax laws and regulations (with some exceptions). His liability for US taxes will also be based in part on his status (is he a green card holder or citizen?).

One of the problems is the 'extras' that a company has to pay just to hire someone. If I as an employer hire someone for $10,000 a year, I have to actually pay $11,000 for that employee. I pay him his salary, minus the income tax withholding which I pay directly to the US government. I then have to pay, over and above, his unemployment insurance and a social security payment. Some UK companies actually set up US 'shell' corporations to handle all the necessary US paperwork and payroll processing.

If your employer does not make this payment--YOU make this payment (the dreaded self-employment tax). You also might have a penalty for failing to properly withhold your US taxes throughout the year.

While this is a bit confusing, take it to the extreme and you'll get a better idea. What if everyone who lived in the UK was actually paid in the Cayman Islands and claimed they only owed Cayman Island income tax? That wouldn't play very well.

I'd check the link that Elvira recommended, and you might want to talk to an accountant IN THE UK that deals with US-UK expat issues (there are some recommended on that site). They deal with this all the time, compared to the few and far between accountants in the US who might have knowledge on this matter.

As I said, you need some professional advice on this. Sorry I couldn't be of more help.

meauxna

I'd just add the RIGHT professional advice. Many of us have been assured that the CPA knows what he's talking about, only to find he didn't. Shop carefully for your pro.

Voltore

Definitely seek advice. In my case when I first came here working for an UK company with an US branch, I was paid by the US branch and paid US taxes but paid UK National Insurance as I was here for a period of three years.

We found a good CPA in the DC area who deals with many media expats and did me well. Redundancy was a mess as then I had my green card but I was paid severance in the UK with some of it tax-free in the UK, except Uncle Sam doesn't have tax-free severance!