LeavingLondon

Hi, i'm about to start work as a freelance publicist in the US for a UK agency (although contracts have been exchanged via their US counterpart and I completed a W9). The UK agency want to pay me in GBP which i don't mind about at all. My US accountant said that should be fine along as the British government don't tax me on my income as either way I'd have to pay CA State tax as they don't care about double taxation. (I'm a US resident on a Greencard). I obviously don't want to pay tax in the UK and then State tax over here. Do you think i would be charged income tax in the UK?

Pulaski

What currency you are paid in has no tax consequences in either the US or the UK, you are taxed based on where you are located while working and your tax domicile. The US also taxes it's citizens and permanent residents globally, but again that has nothing to do with the currency in which you are paid.

What should concern you, but you didn't ask about, is what happens if the pound slides to $1.40? That is about a 10% pay cut for you. The pound could also rise, back to $1.70, which is a 10% rise, so your income could become volatile, which isn't usually considered to be a good thing. I can see why your employer wants to pay you in GBP, but it isn't really a good idea for you.

Steve_

This sounds like a payroll issue, you must be on a US payroll and if you are it makes more sense to be paid in USD.

Have a read of IRS publication 519: http://www.irs.gov/pub/irs-pdf/p519.pdf

Especially the bit about the green card test and dual-status aliens. Basically, if you are an LPR (which you are) you are resident in the US for tax purposes, period. That's what "permanent resident" means.

You should also file a P85 with HMRC and an R105 with any UK financial institutions you intend to keep accounts with. You can search on here for the threads, but long story short, if you have an ISA or anything like that, you should close them because they're not recognized by the tax treaty (reason #1 among a great many other reasons) but pensions are recognized, so a SIPP is okay (so ideally if you have an ISA you can move some of the money at least into a SIPP).

MarylandNed

Not only that but I think, in general, you need more than the USD equivalent of your GBP salary to have the same standard of living in the US (although, of course, that also depends on where you're moving from and to).

Pulaski

Er, he's "freelance", meaning he'll be an independent contractor who isn't on any payroll.

Pulaski

At very least the amount paid needs to be "grossed up" to reflect the payroll taxes that the OP will be assessed as a self employed contractor.

tht

If you will be charged tax in the UK really depends, will you spend any time in the UK? While you are tax resident in the US and CA, spending enough days in the UK could also make you tax resident there (each country has it's own test and does not care about the others criteria), and as you note, while you can offset some tax paid in the UK against what you would owe the IRS, that does not work at the state level.

You might also look at what remittance means when deciding what bank account you have your fees paid in to, specifically what country account is in.

LeavingLondon

Thanks. I'll look that up as I'll be in the UK for about 45 days over the summer (and that's it for the year).

LeavingLondon

That's a great point. I guess i'm thinking more short term. I'm contracted to work 1 day a week and my initial contract is for 4 months, it's not huge money but it's more to gain experience working with the US media and will hopefully lead to more work from US based agencies so I figured i don't mind too much taking a hit if necessary. Plus it'd be handy to have money coming into the UK to pay for stuff whilst i'm there and repairs etc to my house.