Pay UK taxes on US income via freelancing?

This may have been answered before so apologies if it has ... but I struggled to find it.

I am an American who is married to a Brit and living in the UK with an ILR visa.  We've just had a baby so I'm currently on maternity leave and interested in doing some freelance writing and editing work to supplement my income.  I understand I can be self-employed and earn income while on maternity leave as long as it doesn't violate any contracts with my employer.

My question is ...
If I earn income doing freelance work from clients in the US and I record this on my US tax return at the end of the year, do I also need to pay UK taxes on that foreign income? 

If yes, how do I do this?  Should I still register as self-employed with the HMRC and then report it as foreign income on the self-assessment form?

Anyone done anything like this before?

Thanks in advance!

It sounds like you are resident, ordinary resident, but not domiciled in the UK. If have been resident in the UK for less than 7 of the last 9 years you will be taxed in the UK on foreign income only to the extent it is remitted to the UK. ie you can potentially avoid UK tax on the foreign income by keeping it offshore.

The issue does get quite complex. If you need help with your US or UK tax filing please contact me. I am a tax adviser offering expat tax services. Visit my website at www.lynch.pro or telephone Kieran at 01782 444 256

This is certainly an interesting idea.  dleifdlo works entirely in the UK but can apparently potentially avoid UK tax by keeping the money offshore.  Sadly it would be illegal otherwise we'd all be doing it!

The income in these circumstances is 100% UK source and subject (after expenses of course) to UK tax (as this is where the work is done).  From a US perspective it is foreign source and therefore both the foreign earned income exclusion or foreign tax credits could be claimed.  This is quite common and not really complicated, promise!

Since the OP got completely different responses, I wanted to back up Guya here.  His advice was exactly correct and I am a bit shocked that someone touting their services got is so wrong.

so you would register as self employed or create a personal company in the UK and then pay taxes here threw PAYE?

I am kinda in the same boat and just tying to get sane answers that are clear..

I'm pretty sure your tax is paid to the country in which you're a permanent resident, regardless of your income's source.  Ever since I came to the UK and earned money I've paid tax here, and although I still file US tax returns I'll only ever have to pay tax to the US if I go over the income threshold. 

My DH freelances and has income from the UK, EU, and US and he's only liable to pay tax to the UK.  There's a tax treaty between the US and UK which states that on certain income you only need to pay tax to one country, not both.  Since DH isn't American he had to register for an ITIN number on the basis of that tax treaty, and so now the US can't withhold tax on his US-based income because he's proven that he's not a US resident and is already paying tax on the income to the UK.  I know it's a bit different for Americans, but I would think the same principal applies.

My family's in the resident but non-dom boat given the nature of my parent's work (generally offshore). Basically, you can avoid paying British taxes on your income despite permanent residency as long as you're not considered domiciled in the UK, aren't a  British citizen and don't remit the income to the UK. You're *probably* considered non-domiciled if you spend more than 90 days out of the country each fiscal year. But, this isn't a cast iron rule. Effectively, they have to believe that your residency in Britain isn't complete, even if it is permanent. It's rare they reject a 90+ claim though.

It is quite difficult to achieve, however, and the acquisition of this status has become more discretionary after recent court rulings. Also, your claiming maternity leave would probably complicate this, even if you did fall into the 90+ group.

Domicile has not a scrap to do with the myth of the 90 day test here in the UK - honest!

If you wish to claim the remittance basis - and you and the income or gains qualify - you would lose the UK personal allowance and CGT exemption as well as having to pay an additional £30,000 chage if UK resident for 7 years.

This might be usefile as a self employed person...
http://www.ssa.gov/international/Agreement_Pamphlets/uk.html

I am filing for a certificate of coverage from the UK so I dont pay the higher self emplyed tax to the US.

Good luck

I looked at all the info, but I have a new q.

I'm thinking of doing some freelancing for US people, but they would be paying me in US$ into my bank account in the US. 

I would assume if the money stays in the US, all I have to do is report it on my US tax forms next year. Or would I also have to report it on my UK tax forms as well (or only UK tax forms)? 

Is it under those circumstances I need to apply for this Certificate of Coverage?
Thanks!

The work is taxable in the UK if done in the UK and probably taxable here even if done outside of the UK.

If the money is paid into my US bank account, will that ALSO count as "US income"?  Even though I'm sitting in my UK living room doing the freelance work?

If you read that site it says even income in USD is taxed in UK
then when you file US taxes you show you paid UK taxes and that certificate

I havent dont it yet but I know you cant be taxed twice

Thanks Jenn. 

Since the work I may be doing is freelance, I'll actually get paid in pre-taxed money, and will get a 1099 form at end of year (ie if I were in the US, I'd be responsible for reporting it and paying tax on it later). So I beleive I wont need the Certificate from HMRC (because taxes wouldnt be taken out by the US nonprofit). 

So I'm wondering if you or anyone knows whether my UK tax forms alone, showing that I already paid taxes in UK, would be sufficient, when reporting this income for US tax forms...

That is how I am so I am self employed here in the UK ( I have a few conference companys) So I file taxes here and pay NHS and taxes here via PAYE

If you do 1099 only and arent self employed here they wont give you a certificate from the UK but the US you will be reamed in taxes for self employments taxes EVEN if you pay taxes here

Assuming one is indeed self-employed (as against simply an employee of a US entity that simply chooses to ignore employment and tax law for itself and its employees) one would get a certificate of coverage from HMRC showing one is subject to UK social security.  The certificate is then attached annually to the US return. No SET is due in the US- only Classes 2 & 4 NIC in the UK.