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Tax, UK NI, UK pension while working here

Tax, UK NI, UK pension while working here

Old Apr 22nd 2008, 12:26 am
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Default Tax, UK NI, UK pension while working here

I'm in a bit a strange situation and I am was wondering if anyone might be in the same situation...

So - I am being tax equilised to the UK (here on L1 visa), which means - although I pay Federal and State tax's, at the end of the year - if I have paid more than i would have in tax's than what I would have paid if I had remained in the UK, the company will refund me. If I have paid less, I have to pay them.

I also have a 'Cover Note' so instead of paying US Social Tax's (Medicare and Social Security) I should be paying NI contributions to the UK tax people instead.

However, since I moved here there have been no Class 1 or Class 2 contributions paid and I haven't been paying any Social Security or Medicare. HR in the UK says I am not on the UK payroll so cant pay.

The people who are sorting out my tax are supposed to be working with HR to figure out what to do - but the HR woman doesn't seem to know what to do. I've been out here for over 6 months now and still nothing has happened about it.

So - anyone else in this boat and if so, how does your Class 1 and Class 2 contributions get paid. Also, how do you / your employer go about paying into your UK pension plan...
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Old Apr 22nd 2008, 2:22 am
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Default Re: Tax, UK NI, UK pension while working here

Hi, re. UK pension - OH has it taken out of his salary every month then they transfer it back to UK with the employer contribution & it's paid that way. It took them about 4 months to sort this out as at first they were saying that he couldn't carry it on, but as the US & UK companies are owned by the same parent company it turned out to not be a problem.
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Old Apr 22nd 2008, 2:28 am
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Default Re: Tax, UK NI, UK pension while working here

Originally Posted by GetYourBritsOut View Post
Hi, re. UK pension - OH has it taken out of his salary every month then they transfer it back to UK with the employer contribution & it's paid that way. It took them about 4 months to sort this out as at first they were saying that he couldn't carry it on, but as the US & UK companies are owned by the same parent company it turned out to not be a problem.
Thanks - I thought that was how it should be done. Now I just have to convince HR in the UK to put me back on the payroll. I don't know what the objection is with it but they currently don't seem to be too happy in doing this...
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Old Apr 22nd 2008, 2:32 am
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Default Re: Tax, UK NI, UK pension while working here

Yeah, OH had the same problem. He'd been given his P45 when he left so I guess they were right when they said he didn't work for them anymore but they can get around it so make sure they see it through for you.
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Old Apr 22nd 2008, 2:32 am
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Default Re: Tax, UK NI, UK pension while working here

You have to check with a professional UK pension advisor because normally Inland Revenue rules don't allow you to contribute to a pension when you are not earning UK taxable income. It doesn't matter who you work for if your income isn't taxed in the UK.

Re putting you on the UK payroll, it's probably again a tax issue. If you are spending a certain number of days working in the US then you are obliged to pay taxes here.
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Old Apr 22nd 2008, 1:39 pm
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Default Re: Tax, UK NI, UK pension while working here

You can voluntarily pay Class 2 NI contributions if you want : see http://www.hmrc.gov.uk/cnr/osc.htm

The number of years' contributions for a full state pension has recently been reduced, so if your absence from the UK is temporary, there may be no benefit to paying them.

Contributing to a UK pension will be contingent on paying UK tax. I expect that simply putting some money aside each year will be the best alternative.
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Old Apr 22nd 2008, 3:39 pm
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Default Re: Tax, UK NI, UK pension while working here

You could potentially have the company do a one time contribution for the missed years when you return, there are limits to how much you can do a year but a pensions advisor could help them sort that.
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Old Apr 22nd 2008, 7:27 pm
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Default Re: Tax, UK NI, UK pension while working here

Thanks for all the info guys. It turns out the HR back in the UK are actually looking into it now. Fingers crossed might hear something soon...
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