Moving to UK, US income

Hello,

I will be moving to the UK in July to join my husband (UK citizen). I plan to continue to work for my US company but on a consultant basis (hourly as opposed to salaried employee). I assume that I will continue to pay US tax as a US citizen. How is my income taxed for UK purposes?

Also, when you move abroad do you have to pay state tax (I currently live in Virginia but will move everything to Utah before I leave).

Thank you!

Well if you plan on being in the UK for more than six months, they will likely consider you a resident for tax purposes, and tax you on that income (even though it originates from the US).

In order to avoid dual taxation, you can then get a credit for the UK taxes paid and apply it to your US taxes come filing time. There is also a form that you may fill out so that your employer stops taxing you in the US (so as to avoid cash flow problems).

This video is a great overview of how it would work once you move abroad:

http://www.greenbacktaxservices.com/blog/us-expat-taxes-living-in-the-uk/

As far as the State tax is concerned, you should do everything possible to cut ties with Virginia as they are one of the strictest states for expats. Utah is a pretty neutral state, so you would likely have to pay State tax only if income was being received from there.

Let me know if you have any questions.

Good luck!

If your current employer is based in Virginia, you will have "Virginia source income"; moving to Utah for a few weeks before your move to the UK will not satisfy VA for change of domicile and you will likely be filing a non-resident return declaring VA source income in future years. If the employer is in another state, that state may try to tax you as a non-resident with (name of state) source income. All depends on the state. The feds can and do inform a state when income arises from that state.

It's a complicated situation for Virginia. DH and I have just filed for an official ruling on change of domicile; waiting now to hear from the Tax Commissioner after they sift through the 2" thick documentation we provided to prove we have no ties to Virginia and never intend to go back there.

At the very least, you will likely need to file a Virginia part-year resident return for 2014 come 'tax time' in early 2015.

Thank you both for your responses. I am out of my employer's DC office, but the headquarters is in NJ. I don't think I will have to file as a nonresident of Virginia.

I plan on cutting all ties with Virginia. I contacted the Taxation Department today and they told me to notify them via live chat a week before I move to Utah. I will have to file a part-time tax return for 2014.

So your employers will employ you and assign you to the UK. They'll want a certificate of coverage to keep you in FICA and to operate a US payroll to withhold FICA. 

They'll also want a UK payroll to withhold PAYE and possibly find they need to register for corporation tax in relation to UK tax on their new UK operation.

You'll want an English/Scottish law compliant employment contract giving you paid holidays, maternity rights, redundancy rights, a notice period and all of the other benefits of UK based employment to which you would be entitled under local law.

You'll doubtless claim the foreign earned income exclusion or foreign tax credits on your US income tax return.

So your employers will employ you and assign you to the UK. They'll want a certificate of coverage to keep you in FICA and to operate a US payroll to withhold FICA. 

I don't see why they would need to do that. The OP says she will be a consultant and paid at an hourly rate. So she'll be self employed in the UK and billing her previous employer for her time. She'll have to pay UK NICs and register with HMRC.