UK Taxes - Contract work in US

My husband is here on an expat assignment so I'm here as the "spouse" on his work visa. I have an opportunity to do some consulting for my old company in the US. Essentially, I'd work on my laptop on US data and compensation would be to a US account in US dollars. Since I'll be paying taxes in the US, do I still need to pay UK taxes if I'm working here?

We've asked the US accountant and they said ask the UK accountant (who is difficult to track down). Any information would be much appreciated!!

You did the work in the UK, so it's taxed as self-employment in the UK.  Sign up for self-employment with the HMRC.  It's on their website.

You will of course ALSO have to report the income in the US, and can claim either the 2555, the 1116, or a combination thereof to adjust for the UK taxable element.  You will NOT owe US SE tax (self employment or social security tax) as you are paying it in the UK.

Thanks for the info Lizzit. What happens if I go to the US and do the work?

If all your workdays are in the US, it's only taxed in the US.

If you have a mix of US and UK workdays, the treaty may allow the workdays to be 100% US or 100% UK.  That would be messy to figure out.  When I figure this out for one of my clients, I have them fill in a calendar showing all workdays all over the world and analyse it against the treaty.

Thanks Lizzit, You've been a great help. I can go to the US and work. One of our sons left an empty house; he's in Brazil on an expat assignment and I can live in Austin for the duration.  The uni student in Austin probably wouldn't appreciate his mom moving in with him.
We've been here 20 months and I've tried the volunteer thing to fill the days along with walking the dog, but I've worked forever and would rather get back to what I know.
Crossing my fingers that the project comes to fruition.

Given that you are self-employed the UK would tax the entire income under UK domestic law.  Consequently the UK would give you credit for US taxes on any doubly taxed income.

Hmmm. So even if I physically reside in the US when I work my income is taxable in the UK? Both my husband and I are US citizens, don't know if that matters.

Correct. This is long-established under UK case law.

How can a USC working in the US getting paid in USD to a US bank account be liable for UK taxes?

Because that USC is a resident of the UK and therefore taxable in the UK.  The remittance rules - broadly speaking - are not applicable to self-employed income.

Very interesting, although a little odd. Is there a length of time in country that defines residency? What if I'd never moved her with my husband and continued working in the US? I know of several dual career couples where one spouse remains in the US and the other works overseas either for a short 12-18 month assignment or on a rotation.

The only statutory rule on residence is that presence in the UK for greater than 182 days makes one resident.

There is significant case law and HMRC practice on top of that - but my reading of the question is that the person concerned is already UK resident that this is a moot point.

My husband and I are both US citizens; he is the holder of the work visa. Does his visa and residence automatically make me a resident since we are married?

I was in the UK for < 5 months in '06, approximately 7 months in '07 and only 30 days so far this year. If the project comes to fruition I'd just move back to the States.

Sorry for all the confusion. I acknowledge that if I work locally on a US payroll that the UK would like "a piece of the action." However, it just seems odd that as a US citizen working for a US company in the US and paying taxes in the US that I should also be required to pay taxes in the UK.

 

I agree with you. You could have different residences for UK tax purposes.  HMRC would want you to have left the UK permanently for a complete UK tax year and be settled elsewhere (eg Austin)  to break UK residence but that seems do-able...