What is my HMRC liability?

I am US Citizen and a UK resident, with full-time residence in England. I am married to a UK Citizen and have been a UK permanent resident since 2013.

I am self-employed and my sole proprietorship has a US address (P.O. Box) and I use a US bank account. I conduct all business online from my UK apartment. I have US customers, and no UK customers.

I file and pay my income taxes every year to the IRS, but I use my UK mailing address on my tax forms.

I have never filed with HMRC, because I keep getting conflicting advice. I really need to understand what my tax liability has been for the past three years here in the UK - and if I am breaking the law, I want to gets things cleaned up. Can anyone help me?Grateful for any pointers!

P.S. I do not have a residence in the US. I do not have any savings or investments. My husband and I file separately, as he is employed by a UK company.

I am US Citizen and a UK resident, with full-time residence in England. I am married to a UK Citizen and have been a UK permanent resident since 2013.

I am self-employed and my sole proprietorship has a US address (P.O. Box) and I use a US bank account. I conduct all business online from my UK apartment. I have US customers, and no UK customers.

I file and pay my income taxes every year to the IRS, but I use my UK mailing address on my tax forms.

I have never filed with HMRC, because I keep getting conflicting advice. I really need to understand what my tax liability has been for the past three years here in the UK - and if I am breaking the law, I want to gets things cleaned up. Can anyone help me?Grateful for any pointers!

P.S. I do not have a residence in the US. I do not have any savings or investments. My husband and I file separately, as he is employed by a UK company.

If you are self employed and working in the UK then you must pay UK tax and national insurance. You should not be paying any US self employment tax ie FICA, but as a US citizen you are still liable to US income tax.

Hi Nun,

Thank you so much for your reply. I have been paying US self-employment tax (and income tax) for years while in the UK. I understand that I am required to pay UK taxes and NI but am so confused! The UK/US tax specialists that I have contacted (and hired) over the years only help with IRS tax forms, even though I can do those myself, and they have obviously misguided me - and they never seem to have any clear instruction about how to move forward with HMRC. Thanks again for making those clear points - Much appreciated!

Hi Nun,

Thank you so much for your reply. I have been paying US self-employment tax (and income tax) for years while in the UK. I understand that I am required to pay UK taxes and NI but am so confused! The UK/US tax specialists that I have contacted (and hired) over the years only help with IRS tax forms, even though I can do those myself, and they have obviously misguided me - and they never seem to have any clear instruction about how to move forward with HMRC. Thanks again for making those clear points - Much appreciated!

Your primary taxation authority is the UK.....you need to pay UK income tax and NI first. Then you take a credit on your US taxes for the UK income tax you've paid or you use the foreign earned income exclusion to avoid US taxation. For the self-employment tax you should get a certificate of coverage from HMRC.

https://www.irs.gov/Individuals/International-Taxpayers/Social-Security-Tax-Consequences-of-Working-Abroad

Perfect. Thank you! I will have it all straightened out this month. Your help has been tremendous. Thanks again.

Perfect. Thank you! I will have it all straightened out this month. Your help has been tremendous. Thanks again.

This issue was questioned in court way back in 1908, in a case known as Ogilvie v Kitton, which held that income from self-employment outside the UK whilst UK resident is UK taxable. It is surprising that your previous accountants advised you incorrectly, but it is likely that you also have to go back to HMRC and pay tax due for several earlier years. You may also want to file amended US returns.

Hi Guya,

Thank you for that additional information. I was assuming that I would need to amend my US filings and pay back taxes and penalties in the UK. Previous adviser told me my income was not enough to pay file taxes the first year, but I was under the impression that I still needed to pay National Insurance. I have an appointment to see someone in London on Friday. I will be so happy when all of this is behind me. Thanks again for your help.

Good luck with the appointment on what hopefully will be a Good Friday for you. Enjoy the Bank Holiday,

Hi Guya,

Thank you for that additional information. I was assuming that I would need to amend my US filings and pay back taxes and penalties in the UK. Previous adviser told me my income was not enough to pay file taxes the first year, but I was under the impression that I still needed to pay National Insurance. I have an appointment to see someone in London on Friday. I will be so happy when all of this is behind me. Thanks again for your help.

If your income from self employment is low you might not need to file, or have to pay much income tax.

A sole proprietor in the US pays self employment tax if they have $400 or more in self employment income, but if they are filing "married separately" (as I assume you do) they would not pay any income tax until they had taxable income above the standard deduction ($6300) and number of allowances x $4000. You should not be paying US self employment tax. In the UK you get a personal tax free allowance of £10600 and won't pay any NI until your business profit is over £5965