Living in UK with wages from the USA

Our daughter is a dual UK/US citizen who moved back mid November last year. Her US company does have a presence here but not a software engineering division, however they do plan to have one.  Meanwhile she continues to live and work in England, working remotely apart from occasional business trips back to the USA.

My question is, how long can she do this? She will be submitting an HMRC return for the 22/23 tax year and I’m wondering if she is required to be paying NI contributions while working for a company that has no presence here.  Would she need to register as self-employed even though she is not self employed, just working as a regular employee for her existing US company, but happens to be resident here. (Remote working is common in her e-games industry)

I’m neither a  lawyer nor accountant but my understanding is that what she’s doing runs the risk of getting her company in a lot of hot water (as yes they should be complying with all uk laws and regulations including but not limited to NI). One way around it is for her to act as though she were self employed and being paid as a contractor. And yes pay the whole NI herself. But that’s not really kosher either!

If her company’s HR department thought this through they’d probably fall in a faint. If she got pregnant would they give her Uk maternity benefits or the us ones they’re used to? If she got laid off what law would regulate the severance?!which public holidays is she entitled to? Who is responsible for the health and safety of her work area? Etc etc.

Sometimes this can be solved by her company contracting with some temp agency like Ranstead to take care of the uk side compliance and having her get employed through the agency. But then she loses her seniority with the real company and benefits like stock options and the like.

I’m neither a  lawyer nor accountant but my understanding is that what she’s doing runs the risk of getting her company in a lot of hot water (as yes they should be complying with all uk laws and regulations including but not limited to NI). One way around it is for her to act as though she were self employed and being paid as a contractor. And yes pay the whole NI herself. But that’s not really kosher either!

If her company’s HR department thought this through they’d probably fall in a faint. If she got pregnant would they give her Uk maternity benefits or the us ones they’re used to? If she got laid off what law would regulate the severance?!which public holidays is she entitled to? Who is responsible for the health and safety of her work area? Etc etc.

Sometimes this can be solved by her company contracting with some temp agency like Ranstead to take care of the uk side compliance and having her get employed through the agency. But then she loses her seniority with the real company and benefits like stock options and the like.

Thanks for the feedback. Interesting point about health and safety of her work area, our son works for a UK IT company and often works from home using the company laptop, I suppose his company is also responsible for his home workplace, but have never thought about it.

She has never had official holidays with the 10 years she has worked for this company,  it is all results based and employees can take as much or as little time off as they like as long as they are reasonable and are available for product launches, upgrades etc.

Maternity benefits is not an issue but long term sickness or disability is covered by the insurance she pays through her company. Same as I did when I was working in the USA, first 6 months fully paid then 18 months on half pay.

Her HR department say they are working on it but it has been a few months now. They know that they run the risk of her leaving and they don’t want that as she is a highly valued and key employee. She still very much likes the job and the work but will readily leave if needs be.

I actually want to work for a U.S company while in the U.K. the valuable SS via FICA. I searched extensively about doing so and my results all came back to a yes it can be done. You have to file certain forms with HMRC, as you do need to pay NI and set up a payroll system. The BIG but durhamlad is that if the U.S company has a U.K presence, then payment MUST be via that entity. Important remarks have been raised with regards U.K employment laws. Best to be an independent contractor to save the employment law aspect, although the dual presence could be difficult to explain to HMRC. Also the 2555 issue and residency could be problematic. Ultimately, no U.K presence proven would be the best outcome and the filing of IRS SE. And the HMRC payroll setup. SS come retirement would be my driver.

The laws of the nation where the work is performed prevail. This includes (but is not limited to) 28 days paid vacation, statutory sick pay, statutory maternity pay and an auto enrolled pension plan. If tax is not being withheld under PAYE, she will want to be paying UK tax to HMRC no later than 31 December each year to ensure there are adequate foreign tax credits to claim in the US.

In terms of social security, one assumes the employer has a certificate of coverage.

I actually want to work for a U.S company while in the U.K. the valuable SS via FICA. I searched extensively about doing so and my results all came back to a yes it can be done. You have to file certain forms with HMRC, as you do need to pay NI and set up a payroll system. The BIG but durhamlad is that if the U.S company has a U.K presence, then payment MUST be via that entity. Important remarks have been raised with regards U.K employment laws. Best to be an independent contractor to save the employment law aspect, although the dual presence could be difficult to explain to HMRC. Also the 2555 issue and residency could be problematic. Ultimately, no U.K presence proven would be the best outcome and the filing of IRS SE. And the HMRC payroll setup. SS come retirement would be my driver.

Excellent points which I will pass onto her. She does have a dual qualified tax preparer in London who has prepared her US taxes with her being tax resident in the UK for the last 7 weeks of 2022. I have told her to ask the these questions of the tax advisor who will also be doing her UK SA for 22/23.

quote author=guya link=topic=100785.msg1324550#msg1324550 date=1682796514]
The laws of the nation where the work is performed prevail. This includes (but is not limited to) 28 days paid vacation, statutory sick pay, statutory maternity pay and an auto enrolled pension plan. If tax is not being withheld under PAYE, she will want to be paying UK tax to HMRC no later than 31 December each year to ensure there are adequate foreign tax credits to claim in the US.

In terms of social security, one assumes the employer has a certificate of coverage.
[/quote]

Her company exceeds the vacation days and sick leave plus she has been enrolled in their 401k plan for all 10 years she has worked for them. Maternity leave will not be an issue, she is in her 40s, single and has no intention of ever having a baby but has also earned a 6 month paid sabbatical she can take anytime she wants. If the company had not agreed to keeping her on working from home when she moved back last year she was going to take that 6 months while she looked for another job.

She also pays into SS and Medicare like regular employees.


Thanks to all of you for responses, this is a great forum to be a member of.