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Ask HN: Contracting from UK to US advice needed
I maybe about to start contracting for the first time, I'm located in the UK but the company I'll work for will be in US. If I'm successful the salary will be above the UK 40% income tax amount.
* I've heard that I'll have to pay tax in the US and then claim some of that tax back in the UK, does anyone have any experience of this, how do I go about this and roughly how much tax do you end up paying on your income after being taxed by both countries?
* Is it better to be self employed or ltd company in this situation?
* Is there any advice that people can give me about what they've learned about contracting from the UK to the US or about contracting in general
- pierrefar 16y agoHMRC provides free training on this kind of thing. Look up your local Business Education and Support Team. I get letters from them all the time. Also, I'd talk to an accountant who knows about these things.
- arethuza 16y agoYou may want to make sure the accountant actually knows what they are talking about - I had a colleague who ended up having to pay tax in the UK and the US after some advice from a large "big name" accounting firm. I'd try and find an accountant who has actually got some clients who are doing what you plan to do.
- cperciva 16y agoI'm located in the UK but the company I'll work for will be in US. Are you going to be staying in the UK, i.e., contracting remotely?
- someguy1 16y agoYeah, I'll be contracting remotely from the UK
- cperciva 16y agoIn that case, you don't need to pay any US taxes. Just file your UK taxes normally. The US company you're working for will probably ask you to fill out some IRS forms, but keep repeating the phrases "non-resident alien", "not working in the US", "independent personal services", and "non US-source income" and with some luck you'll get through to them eventually. EDIT: The above is not legal advice, I'm not a tax lawyer, and you should look up the US-UK income tax treaty to confirm that it doesn't do anything screwy. But I've run into this several times with Canada/US contracting, and I'd be shocked if UK/US was any different.
- ig1 16y agoI'm not an expert, but I'd suggest having your own limited firm which can invoice the US company (and avoid income tax because it's a b2b transaction) and then taking the money out of your company as dividends to avoid NI. SJD and Nixon Williams are the two main accountancy firms that tech contractors use in the UK, I'd suggest giving them both a call and describing your situation and go with whichever one seems better setup to handle it.
- someguy1 16y agoThanks, I'll have a look at those firms
- smiler 16y agoRead up on IR35 as well http://www.hmrc.gov.uk/leaflets/guide_limitcomp.htm http://www.hmrc.gov.uk/leaflets/guide_limitcomp.htm Read through those questions and ensure you have a setup which does allow you to work through a ltd company