Contract work for US Company

Hi!

I am sure that many threads exist about this topic, but could not find exactly what I was looking for. I've just gotten my entry clearance and given notice to my company. They would like to explore the possibility of keeping me on as a contractor for a period of time after I move. I am open to this, if it's legal, but want to be sure I approach it correctly and do not set myself up to get in trouble with HMRC or put my FLR in peril in a few years' time.

My company is US based and does not have a presence in the UK.

I gather that I need to cease employment on their payroll before I depart the US, and any work done outside of the US needs to be done on a contract basis. Is this correct?

Can I be paid in dollars or does it need to be in pounds?

Can I be paid into a US bank account, or does it need to come into a UK bank account once I've set that up?

Tax-wise, I need to register myself with HMRC, and I need to personally pay tax to them monthly. Correct?

Is it that "easy"? Is there anything I am missing?

And most importantly, is it worth it? I'd love to hear experiences with this. I think my biggest fear in remote work is isolation. I know that there are various coworking options now, but the lack of an office and colleagues while adjusting to a new country is of concern.

Thanks for any and all advice!

Hi. I think you've got it.

I retired from my organization, and they wanted to hire me back to work remotely for a while. I contacted HMRC and they advised on how I could set up the required tax accounts, etc. You might check with them directly.

(I did not end up doing that, as the rules on the employer's end changed as to how long I would have had to have been separated from employment before I could do such work. Too bad, really, as the money would have been good.)

Thanks, Nan! Good to know I’m on the right track.  Will contact HMRC for more details - hope it works out!

Hi. I think you've got it.

I retired from my organization, and they wanted to hire me back to work remotely for a while. I contacted HMRC and they advised on how I could set up the required tax accounts, etc. You might check with them directly.

(I did not end up doing that, as the rules on the employer's end changed as to how long I would have had to have been separated from employment before I could do such work. Too bad, really, as the money would have been good.)

There's an excellent forum for UK contractors that may have some information relevant to your situation.  Here's a link to a thread that talks about what to do about the US side:
https://www.contractoruk.com/forums/accounting-legal/122786-us-citizen-contracting-uk.html

There's plenty more to do with the UK side as well. 

Hope this helps,

Jim

Thank you, Jim! This is really helpful. Starting to think this is more hassle than it’s worth if it’s only for a short period of time. Lots to consider!

There's an excellent forum for UK contractors that may have some information relevant to your situation.  Here's a link to a thread that talks about what to do about the US side:
https://www.contractoruk.com/forums/accounting-legal/122786-us-citizen-contracting-uk.html

There's plenty more to do with the UK side as well. 

Hope this helps,

Jim

There are plenty of negatives, but there's positives as well, like you get to eat and pay rent.  Don't forget that it can take a REALLY long time to find a job here. 

You are right to be concerned about isolation, you will miss an office full of people and work friends.

Thanks again for your help! I phoned up HMRC today as well and they were surprisingly helpful. Feeling much less daunting! It’s nice to at least have this option in my back pocket while I search for full time employment.

There are plenty of negatives, but there's positives as well, like you get to eat and pay rent.  Don't forget that it can take a REALLY long time to find a job here. 

You are right to be concerned about isolation, you will miss an office full of people and work friends.

Hi @ms1967 , I am I'm the exact same position currently and owe my company a decision soon. How did this turn out for you? Are you currently working as a contractor for your US company? I too am worried about the isolation factor, but on the flip side, am also worried about not finding a U.K. job. I'd love to hear any updates on your situation!

Yankybrit seems to have found a solution. What do you guys make of this?

I was in exactly your situation in that I lived and worked in the USA for ten years and then wanted to move back to the UK with my American wife. I wanted to keep my US based job. My company had no UK presence and I was earning my pay is USD in the states.

In the end it was all very simple. I found an international payroll company called Fully Managed Payroll or FMP for short and they set me up as a UK based employee of a US company. US companies don't need to have a "UK presence" or even a UK bank account. Each month the payroll company bills my company for my salary and their fee, I then get paid in GBP to my UK account with all the necessary taxes deducted. They take care of all the P60s and other tax stuff also. I've been doing it that way for five years now and I have filed all my wife's visas using the UK pay slips I get. Never had a problem. Never needed a lawyer. All very simple. Much easier than all this visa business.

https://talk.uk-yankee.com/index.php?topic=95589.msg1267045#msg1267045

Thanks @larrabee ! Almost seems too good to be true, but it could be just what I need!  I just posted in that other thread about how taxes would work with the paycheck going through two countries - wondering if each country would take taxes.

Thanks @larrabee ! Almost seems too good to be true, but it could be just what I need!  I just posted in that other thread about how taxes would work with the paycheck going through two countries - wondering if each country would take taxes.

You would pay taxes to the UK and then claim them as either FEIE or FTC on your US return.

My concern with yankybrit's situation is that he/she says they don't have a UK employment contract, which would technically be illegal.  Hoping it's just a miscommunication.  But would mean that you are not a protected employee if anything were to go pear shaped.

But yes, worth looking into!

Sorry for the delay in responding! Unfortunately it did not work out with my US company because we couldn’t agree terms, so I am not currently working for them (or anyone - still searching!). When I was researching, it seemed that going through an umbrella company was going to be the most straightforward and “safe” way for me, but I am sorry to say I did not get much farther than that.

I would also just caution you to be sure to agree favourable (to you) terms for a contract. I know we all want to work and any income is good income in this phase, but I personally experienced a situation where my US company felt they could take advantage of that (just the tip of the iceberg was feeling that they could pay me far less). It was clear that the transition from employee to contractor wasn’t going to be a happy one, and I wasn’t keen on spending my first months here working from home, alone, and feeling miserable and taken advantage of by a job thousands of miles away - all while adjusting to everything. In the end, though I’m still job hunting, I am 100% sure that it was the right decision for me to walk away. I know it is a luxury to be able to say that, and I am sure you must work for nicer people that that, but just wanted to share my experience as a caution.

Keep us posted on what you do!

Oh wow, I am sorry for that situation, but it sounds like you definitely made the right decision to walk away. And thank you for the caution!

So far, my company seems willing to work with me and I'll have a big say in the terms (small company, and they've never done this before). I'm leaning toward a part-time situation where I can still look for full-time UK employment during that time since everyone is saying it will take longer than expected. I will keep you posted on what happens!

And best of luck with the job search. Keep us posted on that as well!

@AMM1987 just checking in to see how things worked out for you?

I have been offered a contract role here and am deciding whether or not to go PAYE through an umbrella company, or set up as a contractor/limited company. Despite all the advice previously, I’m still torn! And not sure i have time for the latter as I start in two weeks. Wondered if you had any insight.

Hi @ms1967 ! I am still awaiting my visa approval, but in the meantime my company has looked further into it and consulted with their employment attorney (US attorney, granted). It sounds like I’ll be able to stay on as a part-time employee still paid through the US payroll, so US taxes will be deducted. I know I’ll still need to file a UK tax return and things may get a little sticky. But, I’m taking this as a temporary solution to wrap up a particular client project for 3 months, and will look for full-time UK work in the meantime. Even if it’s legal from my US conpany’s perspective, I don’t want to do anything illegal by UK standards, and I’m still unclear on that.

I’m sorry my answer probably does not help your situation! From what I understand, setting up as a limited company is a little cumbersome in the UK (but I could be wrong).

Let me know what you find out and end up deciding!