Living in London but doing freelance work for U.S. firms...who do I pay taxes to

Hello!

I will be moving to London in 2013 and continuing to do remote freelance work solely for a bunch of U.S. firms. I know that if I meet the physical presence or bona fide residence tests in London, I can exempt up to $92k in U.S. taxes. But do I need to then pay taxes to the UK government? I would be there on a spousal visa, not a UK citizen.

Thanks,

K

You need to determine your UK residency status to find out how you will be taxed by the UK. However, at a minimum as a UK resident, the UK will tax you on all UK source income and any income you bring into the UK. As a USC your will be taxed on your worldwide income.

You need to determine your UK residency status to find out how you will be taxed by the UK. However, at a minimum as a UK resident, the UK will tax you on all UK source income and any income you bring into the UK. As a USC your will be taxed on your worldwide income.

Just a tad misleading. You will always have to file a US tax return but you will not be double taxed.

Ok, so can anyone recommend an accountant in London who's not super expensive and who is familiar with the ins and outs of U.S.-U.K. taxes?

I also have rental property in the U.S....so not sure how that is taxed in the U.K. if at all.

To my surprise, based on initial calculations, it looks like I would pay more in taxes in the U.S. than in the UK (probably due to U.S. self-employment taxes).

I also have rental property in the U.S....so not sure how that is taxed in the U.K. if at all.

Again you have to know your UK residency status. If you are resident, but not ordinarily resident you can opt to be taxed on a remittance basis, ie your US rental income will only be taxed in the UK if you bring it into the UK. However, if you are resident and ordinarily resident the UK will tax your world wide income on an arising basis. Here is the HMRC booklet that explains all this. Section 7 has information about coming to the UK

http://www.hmrc.gov.uk/cnr/hmrc6.pdf

If we move over this summer, this will be my situation too. I just got a letter from my client saying I could continue working for them regardless of primary residence.

If your main residence is in the UK, then you will pay UK taxes and file a US tax return each year.

You can deduct the cost of business expenses, use of your home, utilities, equipment. I think it is based on number of rooms and duration of use.