US Remote Payroll with Residence in UK

Hello,

I am hoping someone can assist me. My husband and I (US citizens) recently relocated to the UK for a 1 year work assignment for his job. He was assigned a Tier 2 Visa of which I am a dependent. I remained working remotely for my US company part-time and still get paid into my US bank account (I do not have a UK bank account). My US company does not claim that I work in the UK, and they do not have any business dealings in the UK. What are my tax implications in the UK?

Any information/suggestions are appreciated!

Hello,

I am hoping someone can assist me. My husband and I (US citizens) recently relocated to the UK for a 1 year work assignment for his job. He was assigned a Tier 2 Visa of which I am a dependent. I remained working remotely for my US company part-time and still get paid into my US bank account (I do not have a UK bank account). My US company does not claim that I work in the UK, and they do not have any business dealings in the UK. What are my tax implications in the UK?

Any information/suggestions are appreciated!

The UK is your “tax home”. So you should not being having taxes, social security, etc withheld from your pay. 

You need to complete self assessment with HMRC by January 31 and pay any tax due.

When you complete your US tax return, you will declare your taxes paid to the UK and not be taxed on top of that.

The UK is your “tax home”. So you should not being having taxes, social security, etc withheld from your pay. 

You need to complete self assessment with HMRC by January 31 and pay any tax due.

When you complete your US tax return, you will declare your taxes paid to the UK and not be taxed on top of that.

Thanks for your response! 

I think the main concern is that my US company is not claiming that I am living in the UK, meaning according to my paystubs and deductions, I still appear to be living in the US.  Additionally, we only use my husband's income in the UK.  I am not bringing/transferring any of my personal US income into the UK. 

Do you still suggest I complete a Self Assessment?

Thanks for your response! 

I think the main concern is that my US company is not claiming that I am living in the UK, meaning according to my paystubs and deductions, I still appear to be living in the US.  Additionally, we only use my husband's income in the UK.  I am not bringing/transferring any of my personal US income into the UK. 

Do you still suggest I complete a Self Assessment?

Your company is acting illegally.  You live and work in the UK, NOT the US.  You legally either need a UK employment contract or to be self-employed and bill your gross earnings. You are taxed in the UK, as you are a resident.  You have no option but to complete a self assessment with HMRC.

You may want to consult with a good employment attorney.

Your company is acting illegally.  You live and work in the UK, NOT the US.  You legally either need a UK employment contract or to be self-employed and bill your gross earnings. You are taxed in the UK, as you are a resident.  You have no option but to complete a self assessment with HMRC.

You may want to consult with a good employment attorney.

I agree. It doesn’t matter if you never bring the money into the UK, you are tax resident in the UK and are therefore taxed on your worldwide income.

Your employer has obligations under English or Scottish employment law. These cannot be dismissed or ignored.  This guide is well written: https://uk.practicallaw.thomsonreuters.com/7-503-4973?transitionType=Default&contextData=(sc.Default)&firstPage=true&bhcp=1&fbclid=IwAR0N5v9gbJi0tNi_Q5U1wm0CTteV1szNj2Qot5CrffBqfjJ1sIwvQS8Azrc

The practical issues relate to income tax and social security payments on your husband’s salary. Where is his employer on these matters?

Income tax
Is the US employer obliged to pay tax under the UK PAYE system? See for instance this HMRC guidance
https://www.gov.uk/hmrc-internal-manuals/paye-manual/paye81610

If the salary is paid via PAYE, this should take care of UK income tax liabilities.
If not, your husband should register for UK self-assessment, and pay tax directly to HMRC.

In both cases, your husband will need a National Insurance number. Has he applied for this? He may need to go in person to obtain this. If he needs to file a self-assessment, he will need also to apply for a UK Unique Tax Reference. A UTR is needed to enable a tax return to be filed.

Social Security
There are different rules relating to Social Security. There is a US UK social security agreement. See for instance the table on page 2 of the following guide.
https://www.ssa.gov/pubs/EN-05-10199.pdf

Overall
Your husband’s employer should have taken professional advice on this, and shared it, before the secondment started.

Your company is acting illegally.  You live and work in the UK, NOT the US.  You legally either need a UK employment contract or to be self-employed and bill your gross earnings. You are taxed in the UK, as you are a resident.  You have no option but to complete a self assessment with HMRC.

You may want to consult with a good employment attorney.

Thank you for your response.  I have reached out to numerous tax consultants as well regarding this matter. 

I agree. It doesn’t matter if you never bring the money into the UK, you are tax resident in the UK and are therefore taxed on your worldwide income.

If I were to file on the remittance basis, it would matter whether I bring money into the UK, as per this filing, I would only be taxed on what I am bringing in.  Thank you for your response.  It seems the overall consensus is that I need to file. 

The practical issues relate to income tax and social security payments on your husband’s salary. Where is his employer on these matters?

Income tax
Is the US employer obliged to pay tax under the UK PAYE system? See for instance this HMRC guidance
https://www.gov.uk/hmrc-internal-manuals/paye-manual/paye81610 [nofollow]

If the salary is paid via PAYE, this should take care of UK income tax liabilities.
If not, your husband should register for UK self-assessment, and pay tax directly to HMRC.

In both cases, your husband will need a National Insurance number. Has he applied for this? He may need to go in person to obtain this. If he needs to file a self-assessment, he will need also to apply for a UK Unique Tax Reference. A UTR is needed to enable a tax return to be filed.

Social Security
There are different rules relating to Social Security. There is a US UK social security agreement. See for instance the table on page 2 of the following guide.
https://www.ssa.gov/pubs/EN-05-10199.pdf [nofollow]

Overall
Your husband’s employer should have taken professional advice on this, and shared it, before the secondment started.

Thanks for your response.  If we have to file separately in the UK, how does my husband's employer and his salary relate?  His employer is a worldwide company with offices in the US and UK (and everywhere else).  He is getting paid in USD to a US bank account as well and since they handle international relocations and temporary assignments frequently are well versed in what practices they need to provide for him.  His company is taking care of his taxes for both US and UK.  Since we cannot file jointly in the UK, I am on my own.   We both have insurance numbers that were required when we applied for our Visas, but again, am unsure how this relates?  Could you explain??

Thanks for your response.  If we have to file separately in the UK, how does my husband's employer and his salary relate?  His employer is a worldwide company with offices in the US and UK (and everywhere else).  He is getting paid in USD to a US bank account as well and since they handle international relocations and temporary assignments frequently are well versed in what practices they need to provide for him.  His company is taking care of his taxes for both US and UK.  Since we cannot file jointly in the UK, I am on my own.   We both have insurance numbers that were required when we applied for our Visas, but again, am unsure how this relates?  Could you explain??

I would ask his employer if they will cover your UK tax filing as well.  It’s not uncommon in transfers to cover the whole family.

To answer your earlier question - you need to look at your employment EXACTLY as your husbands employer does.  It does not matter that you are paid in USD into a USA account.  Your tax obligation is the UK first, then the USA.  You can choose to bring zero money from the USA to the UK, but the UK still calls “dibs” on the tax. 

Just to clarify - When did you become resident in the UK? Was it during the 19/20 UK tax year (April -April)? If so, you would need to ensure you register to get a self assessment account by October 2020. The tax (and self assessment SA1) would be due January 31, 2021.

If you became resident in the UK before April 2019, then the tax return was due today...

You cannot file a 'joint' tax return as a married couple, like in the US.

If I were to file on the remittance basis, it would matter whether I bring money into the UK, as per this filing, I would only be taxed on what I am bringing in.   

  An incorrect assumption. The work is performed in the UK. Whether or not the income is remitted to the UK is not relevant.