Social Security & Medicare or NI - Which to pay?
 

Hi,

I am very close to getting my L1 visa and will hopefully be on the way to California in a couple of months.

I have spent a great amount of time on various forums gathering as much knowledge as I can and need to get a bit of advice on Social Security & Medicare or NI payments and which is the best to go and why.

My understanding so far is that I could pay either for the first 5 years at most. We are planning on being in the US for 2-3 years initially before deciding on our future, i.e. stay in the US or move back to the UK.

I have seen various discussions about this where some people are paying social and some still make NI contributions. My main driver is whcih is going to be best for me financially. I approximate my Social Security/Medicare payments to be around $550 a month, i think if I make Class 2 it will be less than 10% of that!

I suppose my questions are:
1, Am I right in my assumptions?
2, Which is the best path to take?

Thanks

Re: Social or NI - Which to pay?
 

I may be mistaken, but I don't think you have an option on paying social security (is that what you mean by "social"?) It will be deducted from your wages.

Re: Social or NI - Which to pay?
 

Sorry yes I meant social security (i've updated post and subject to clarify...)

Re: Social or NI - Which to pay?
 

You don't have a choice - it is dictated by your terms and conditions of the transfer. Personally, I don't pay Social Security, but I pay NI as advised by my firm (a multi national accounting firm).

This contradicts what they had initially told me though, so it's clearly a difficult subject!

Re: Social or NI - Which to pay?
 

If it is dictated to me by my terms and if it is in my best interest to pay NI I will bring this up as a discussion before I get over there. I think I may still be in a position to negotiate this if it is better for me to pay NI.

From my experience of the process so far my company doesn't have much knowledge of UK to US immigration so I think I have the opportunity to at least discuss the way I would like to do it if it's an option, which it seems to be if it is company dependant

Re: Social or NI - Which to pay?
 

I chose not to pay social security and my company continued to pay into NI and my UK pension. There are some forms to fill out in order to prove you are paying elsewhere to exempt you from social security. I don't necessarily think it would have to be determined by your company though, as you would be able to demonstrate you are paying into NI even if it wasn't through the company.

I chose to do this because I wasn't planning on staying in the US. As soon as I got my green card I stopped paying NI and started paying social security but that was also partly because I got a new job at that time.

Re: Social or NI - Which to pay?
 

we are the same. DH pays NI as we were not sure how long we would stay and felt it better to maintain UK pension etc in the short term. Now GC is in process and when (assuming!) it is sorted he will revert to social security as we would need to build entitlement here.

Re: Social or NI - Which to pay?
 

If you have paid into SS, then can you not use those credits to apply to a UK state pension should you retire back home? Then taking it in GPB as if you had paid into the system there? Reciprocity.
Thought that was the case.

Considering the US actually has no state pension (by definition), then SS may get scrapped before they do the same with the UK state pension. As we all know, the babyboomers will exhaust SS funds.

Were that to happen, then perhaps the SS credits would still apply in the UK?

Re: Social or NI - Which to pay?
 

To clarify my previous comment - your terms of employment will dictate if you HAVE to pay UK NI or USA SS. If they dictate that you HAVE to pay US SS then you MAY CHOOSE to pay UK NI (class 2).

The reciprocity thing is true, although apparantly difficult to sort. I was advised to still pay class 2 UK NI if I was paying US SS.

Re: Social or NI - Which to pay?
 

Sorry if I am not understanding this correctly. My terms of employment will dictate this? So it will be my company that decides if I pay UK NI or USA SS?
If this is the case can't I request that my company change my terms of employment (contract?) so I pay which is best for me?

I did phone the UK to ask there advice but they didn't really understand what I was asking, I suppose I need to speak to someone in the US about my options but where do I start?

Re: Social or NI - Which to pay?
 

No - UK tax law will dictate what you pay, and UK tax law is based upon the terms of your employment. The terms of your employment will no say "Dave should pay NI" but the terms will dictate what you should pay by virtue of other clauses/provisions such as rights to return to the UK to work etc.