Tax information?
#1
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So i filed my P85 ( i didn't wait untill i was working as i dont plan on making any NIC payments) i did say that on the p85 when asked roughly how long you would spend in the uk over the span of 3 years i put 10 on the 3rd tax year. Im trying to get my head around this UK non resident/resident tax stuff and i can't quite get it. Will i still need to pay UK tax when i receive my EAD and can finally work? If so, is this expensive as i would be paying US and UK tax and do i need to set it up in some way? Can some one give me a few brief explanations... it would be much appreciated!
#2
No, you will not pay UK taxes. The UK does not even attempt to tax its citizens when they live outside the UK.
I see that you have dismissed the possibility of making NIC contributions. Unless you have "private means" and are confident of retiring wealthy, or so poor you can't afford a few hundred dollars a years, continuing to contribute is one of the cheapest and lowest risk ways of increasing your income in retirement.
I see that you have dismissed the possibility of making NIC contributions. Unless you have "private means" and are confident of retiring wealthy, or so poor you can't afford a few hundred dollars a years, continuing to contribute is one of the cheapest and lowest risk ways of increasing your income in retirement.
#3
So i filed my P85 ( i didn't wait untill i was working as i dont plan on making any NIC payments) i did say that on the p85 when asked roughly how long you would spend in the uk over the span of 3 years i put 10 on the 3rd tax year. Im trying to get my head around this UK non resident/resident tax stuff and i can't quite get it. Will i still need to pay UK tax when i receive my EAD and can finally work? If so, is this expensive as i would be paying US and UK tax and do i need to set it up in some way? Can some one give me a few brief explanations... it would be much appreciated!
you on UK source income, but there are tax treaties and rules in place so that you can use the tax on that income you might have to pay where you live to offset any UK tax bill.....you won't be taxed twice.
I'd advise you to reconsider not paying voluntary NICs while you are out of the UK.
#4
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I see that you have dismissed the possibility of making NIC contributions. Unless you have "private means" and are confident of retiring wealthy, or so poor you can't afford a few hundred dollars a years, continuing to contribute is one of the cheapest and lowest risk ways of increasing your income in retirement. 

When you analyze these government plans you find they couldn't possibly function without government force because they are re-distributive. While I haven't looked at the UK plans I see this in spades with bend points, WEP, GPO and taxation of social security in the US system.
So in almost 20 years I haven't given anything to the UK government voluntarily. Likewise I wouldn't make such payments to the US government if available. Convince me I should do otherwise.
#5

When you analyze these government plans you find they couldn't possibly function without government force because they are re-distributive. While I haven't looked at the UK plans I see this in spades with bend points, WEP, GPO and taxation of social security in the US system.
So in almost 20 years I haven't given anything to the UK government voluntarily. Likewise I wouldn't make such payments to the US government if available. Convince me I should do otherwise.
So in almost 20 years I haven't given anything to the UK government voluntarily. Likewise I wouldn't make such payments to the US government if available. Convince me I should do otherwise.
If you don't want to invest for your retirement that is a free choice. There are other investment opportunities available, but all investments have risks. I am one of those people who believe the risk of investing in a British state pension is lower than in other competing investments. I recognize that if my career progresses, and my private business thrives, and the British government makes the state penion means-tested, then I might get a reduced, or no, state pension.
In the event that I get nothing because I have substantial investments and other income streams I won't care about the very modest amounts I contributed to the British NI fund. On the other hand if for any reason I retire poor, with few assets and little other income, then I will be very glad that I have my British state pension. But that's just me.
Last edited by Pulaski; Jan 10th 2016 at 3:31 am.
#8
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Joined: Mar 2015
Posts: 101

Well I made my argument to you already.
Wow there. I don't want to invest in a government run scheme were I don't have a personal account and no right to any of the money. I am quite happy to have paid into pensions in the UK and 401k, IRA, Roth, HSA and taxable accounts in the US. That's saving for retirement. In fact I quit working to live of my savings last year at 50.
The fact that they look to be better investment options suggest that they have to go away or at least be reduced.
Wow there. I don't want to invest in a government run scheme were I don't have a personal account and no right to any of the money. I am quite happy to have paid into pensions in the UK and 401k, IRA, Roth, HSA and taxable accounts in the US. That's saving for retirement. In fact I quit working to live of my savings last year at 50.
In the event that I get nothing because I have substantial investments and other income streams I won't care about the very modest amounts I contributed to the British NI fund. On the other hand if for any reason I retire poor, with few assets and little other income, then I will be very glad that I have my British state pension. But that's just me. 

#9
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Joined: Mar 2015
Posts: 101

I know the low end doesn't pay anything. I'll convert a bunch of money to Roth in 2016 at a tax rate of 0%. I quite working to escape the penalties.
#10
I do all of that too, but you (and others reading this thread) should look into portfolio theory and risk diversification. I would not recommend putting all your eggs in one basket, but putting a little in British NICs provides additional diversification (and is a great step if you are trueky poor, with no other investments) and is an investment that has almost zero correlation with "the market".
#11
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Joined: Mar 2015
Posts: 101

I do all of that too, but you (and others reading this thread) should look into portfolio theory and risk diversification. I would not recommend putting all your eggs in one basket, but putting a little in British NICs provides additional diversification (and is a great step if you are trueky poor, with no other investments) and is an investment that has almost zero correlation with "the market".
I already have a big bucket in the US SS system that's forced. I have a small bucket in the UK system that was forced.
I would caution against 'investing' in either SS or the UK system. When analyzed in detail SS is a very poor investment. It's essentially an investment in TIPS with longevity layered on top. Read Jeremy Siegel's recent article on the subject. I expect the UK system is bad as well but I don't know.
#12
Pulaski, a few months ago I said on here about contributing payments still but people said to hold off and wait for some changes that may or may not be occurring. Have those changes happened? As contributing was something I was very interested in, how do I go about it? Sorry if it's been covered a million times but while the subject has come up I was just curious.
#13
Whatever your thoughts about the viability of various social security schemes anyone that qualifies to pay voluntary Class 2 NICs is missing a fantastic deal, that just got better with the new UK flat rate pension. Right now Class 2 NICs are 145 GBP a year so even if you are dubious about what you might get the cost is so low you'd be foolish not to take advantage. Also there are no WEP issues for voluntary NIC payments.
#14
Pulaski, a few months ago I said on here about contributing payments still but people said to hold off and wait for some changes that may or may not be occurring. Have those changes happened? As contributing was something I was very interested in, how do I go about it? Sorry if it's been covered a million times but while the subject has come up I was just curious.
That give you all the information you need and an application form. I'd apply asap.




