Need help with UK taxes and Form P46

New to the UK-Yankee community so just want to post what a fantastic resource this is.

My situation: just moved to the UK (Feb 1, 2011) from the US with the same employer.  Due to some visa issues, terminated my employment with the US Company and began a new 14 month employment contract with the UK subsidiary.  Have three major UK tax questions (I understand the US tax implications fairly well but am clueless about the UK aspects):

1. I have to fill-in Form P46 since I don't have a P45.  I was employed in the US till Jan 31, 2011 and began my UK contract on Feb 1. This is my first job in the UK since last April 6.  Can I select "A" or do I have to select ""B".

2. For my 2010/11 US salary (prior to UK employment beginning on Feb 1), do I have to pay UK taxes when the tax year ends on April 5, 2011.  I would think not since I would be non-UK domiciled (less than 182 days in the country) but want to confirm.  Can I still claim the full standard tax free personal allowance of £6,475 on my UK salary for Feb, March and 1st week of April 2011?

3. For my 2010 bonus (earned in the US for work from Jan 1, 2010 to Dec 31, 2011) which will be paid to me in the UK on Feb 28, 2011 do I pay UK taxes?  Seems unreasonable since the bonus is for a period when I was not in the UK.  Is there something I need to instruct UK HR on to avoid UK taxes being withheld on my bonus payment.

Some of these questions may seem fairly simplistic but I have no clue, so any advice would be greatly appreciated!

Cheers

 

The personal allowance is not available if you elect the remittance basis, so you can only claim it if you file on the arising basis for the year of arrival - in ther words report worldwide income and gains on your UK return.

Your employers will doubtless split the bonus so you end up partly wit US and partly UK withholding if it relates to both periods of employment.

Thanks for your help.
Any thoughts on the P46 form choice - "A" or "B"?
Also, I had a typo in the original post - my bonus (to be paid on Feb 28, 2011) will be for the period Jan 1, 2010 to Dec 31, 2010 (prior to my arrival in the UK) so there is no split between US related bonus and UK related bonus.

The personal allowance is not available if you elect the remittance basis, so you can only claim it if you file on the arising basis for the year of arrival - in ther words report worldwide income and gains on your UK return.

Actually, HMRC state that for the tax year you arrive in the UK, they normally split it (quite sensibly) into resident and non-resident periods, and you don't need to report anything earned while you were non-resident, as long as you are coming to live in the UK for at least two years.

For the resident period, you do need to pay UK tax. You will most likely be considered as resident and ordinarily resident in the UK, but domiciled in the US, assuming that you intend to go back there at some point (although domicile is a complicated topic as even HMRC admit). Because you are domiciled abroad you can elect either the arising basis or remittance basis for your UK tax.

If you choose the arising basis for the year you arrive, you would still enjoy the full personal allowance even though you are only here part of the tax year. I don't know whether they would tax your bonus though. Best to just ring up HMRC and ask.

If you choose the remittance basis for this year, or any other tax year, and your non-UK income that you leave outside the UK is under £2,000, then you can also keep your full personal allowance. If it's more than that, you not only lose your personal allowance but usually have to pay the £30,000 Remittance Basis Charge.

When you fill in your P46 you should indicate that this is your first job for the tax year.

For more info see the following HMRC link:
http://www.hmrc.gov.uk/incometax/tax-arrive-uk.htm

Hope this helps!

Great answer - apologies if my previous answer was misleading.   HMRC count all income pre-arrival towards that £2,000 limit.

It is unusual for someone arriving on 1 February 2011 to have earned below £2,000 in the period from 6 April 2010 to 31 January 2011 - this is why most folks arriving on 1 February would elect the remittance basis. It is of course a maths question - you would file on either the arising or the remittance basis - whichever you figure gives the lowest amount of tax.

But if I understand correctly, HMRC would split the OP's tax year and wouldn't care about anything he earned before his arrival in the UK. The only income that would potentially figure into the remittance basis calculation is the OP's bonus since it was paid after he became resident in the UK.

This document talks about the split year concession (and is also good reading for any US citizen paying taxes in the UK):
http://www.hmrc.gov.uk/cnr/hmrc6.pdf
See section 2.4, "Residence – Years of arrival in and departure from the UK", on p. 8.

I am not a professional, and HMRC are known to give abstruse instructions most of the time, but on this point I think their guidance is actually pretty straightforward and easy to follow.