US-UK (high salary) tax question

Ok, this piggy backs on a lot of what has already been asked, but I wanted to ask a couple of direct questions.  I am a US law school grad who will be starting at the London office of a US law firm in October.  Fortunately or unfortunately (given my tax situation), I will be earning about $200k (US dollars), which I guess translates to about 100-110k GBP.  As I think is standard practice, my initial assignment is for 2 years.  I am single, no children, no US-based investmests, carrying almost 200k in student loan debt.  Are there any UK tax deductions/breaks that will be available to me, or should I be prepared to pay every bit of the 40% after the 32,400?  I am also wondering whether I should consider going with an off-shore account as opposed to a UK bank account?  Will that help me at all?  Would the housing break that some folks have mentioned apply to me?  Oh, I should mention that my salary is paid in dollars (subject to the exchange rate). 

I would appreciate any knowledge that folks might be able to share.
 

actually, bad news, I think that you are not only going to be taxed in the uk but also taxed in the U.S. as anything over $80,000 is taxable.  but there are more qualified people on here to answer this...

Your law firm should have you on an expat package, which should include:
   tax equalization
   tax preparation for US and UK
   clever tax breaks for Resident but Not Ordinarily Resident status in the UK.

If your company is doing a tax equalization programme, then it does not matter what you do to reduce your UK tax, you will never pay more than your taxes would have been had you remained in the US.  In this case, to reduce your tax you should do the same things you do to reduce US tax:  keep track of your US charitable donations, US income and sales tax paid, mortgage interest paid, school loan interest paid, business expenses, maximize your 401k contributions, and so forth. 

If your company is not doing a tax equalization programme, then it makes sense to save the maximum amount of UK tax dollars.  If you are on the US payroll, contribute the maximum to your 401k programme.  Open offshore bank accounts for your direct deposit, which may help to allow you to shelter your offshore workdays from UK tax.  It also shelters the interest earned on the account from UK tax.  Be sure that UK PAYE (income tax withholding) is being done rather than US.  Be sure to stay on US SS if you can; the US system is generally understood to be better.  Your housing costs may be deductible, depending on a number of circumstances, so keep track of those as well.

If your company does not understand any of these issues I just raised, they should seek expert advice to sort you out.

Always be prepared to pay the most tax; that way, you are pleasantly surprised when you pay less.  It is more stressful to go the other direction.

Your law firm should have you on an expat package, which should include:
   tax equalization
   tax preparation for US and UK
   clever tax breaks for Resident but Not Ordinarily Resident status in the UK.

Yes, I was in a similair situation myself and my company offered tax equalization and tax preparation as benefits.

The resident but not orginarily resident stuff though is very confusing for me still... :-(  I am sure it is for most.  Now that I am looking to come back to the UK on my own terms, my head is hurting.  I know I will use one of you handy dandy folks that frequent the boards, but man, it is a complicated mess.

The UK tax regime is straightforward. They do not have a myriad of deductions, credits, etc. that the US does. Just wait when you have to file an AMT form in the US. As has been said, you are probably being tax equalized. That means they will deduct US taxes from your pay check and pay your UK taxes. E&Y prepares my tax returns although this year I received the return and found several errors in it with respect to the application of the law. It was very esoteric as it concerned New York State and New Jersey taxes. An important factor is the 80K exclusion although the benefit of that is being reduced. Additionally, your US tax return should show a credit for taxes paid to other jurisdictions. The infamous 1116 form. While you get a credit, it cannot exceed the amount of tax you would pay on the income taxed abroad using US tax rates. So if the income taxed in the UK was 200K USD and you paid 75K in taxes to Inland Revenue the US would allow a credit of say 60K.

I am afraid that Francis is vastly over-simplifying.

The UK system has many, many deductions for short-term assignees.

If you can arrange to get sent from the New York office then you can deduct your housing costs and communting costs and pay no tax on income relating to non-UK workdays.  A non-UK bank account will be vital.

The US tax system is however going to punish you because while AMT will be less of an issue than it would be in New York the US will only give you a deduction  for $80,000 plus a tiny proportion of your UK housing costs.  (AMT is no longer an issue for most guys in the UK.

It is quite realistic to be able to reduce UK taxes to almost nothing because of available deductions; but George W's latest tax law changes would still have you paying Uncle Sam.

I think it would suit you best to take time consulting with a dual qualified US/UK advisor so that you aim to minimise both sets of taxres and do the planning before you come over here.