working and living in UK for global company, but reporting to & paid by US dept

Will I be double taxed, I still report to my US department, funds to pay my salary will come from their pay bracket but to me in pounds through our European finance devision. Will I have to pay UK and US taxes... can I be except from one or the other or a portion of one or the other, I do not get paid more than 60,000 GBP/yr?

Any insight would be greatly appreciated.

Thanks,
Shaz

Hi,

If I remember correctly, the US and UK have a reciprocal tax agreement which I believe means you don't have to pay tax to both countries unless you make more than $80,000.  If you make less than $80,000, you only pay to whichever country you live in.  At the moment £60,000 is $87,000, so you might have to pay tax on the extra $7,000.  (Disclaimer: All of that is from my memory, so don't use it as a basis for financial planning!)

For example, I do a lot of work for an American company's London branch.  They pay me in pounds, but the payments are sent out of their New York office into my US bank account.  They take out UK taxes, and give me a W2 to reflect that.  When tax time comes, my US accountant does whatever tax magic she does to show that I've already paid taxes to the UK, so I don't have to pay them again to the US.

You should check with a professional to make sure what's happening in your situation, but it sounds like your situation is similar.

[EDIT] Here's a link to the IRS page that explains, briefly, what the deal is:

http://www.irs.gov/faqs/faq/0,,id=199678,00.html

good luck,
Carl

Carl's solution gives the right answer but is a bit muddled up...
As a US citizen you asre taxable by the US on worldwide income.

However if you xclaim it on a US tax return you can exclude up to $91,400 (in 2009) of foreign earned income so salary up to that amount could be excluded from US tax.

You do not have to claim the exclusion, sometimes the answer is better by claiming foreign tax credit (for UK tax).  Some income - such as employer contributions to UK pension plans - cannot be excluded.

If you have other income (eg interest and dividends) you may need to resource these as foreign on a US return to avoid double taxation.

If - like Carl - you are paid in the States and remit money here you may find yourself owing UK tax on foreign currency gains on many of the remittances if you claim the remittance basis on your UK tax return.