Thank you for your answer, which I anticipated. However, my situation is complicated by my need to calculate the tax credit for USA income. The USA has removed my overseas earned income before calculating USA taxes. There are 2 scenarios:
Scenario 1 - from my 2013 USA return (as per USA practice)
a. Total income after subtraction of foreign earned income $ 153,573
b. Total USA tax $ 31,522
c. Effective USA tax rate 20.525 percent
d. Total income adding back foreign earned income $ 214682
e. Effective USA tax rate 14.683 percent
I obviously prefer Scenario 1, but understand that the likely situation is Scenario 2.
I also need to clarify what tax treatment the following items receive under UK tax law.
1. Social security taxes on the foreign earned income. I am treating these taxes as expenses reducing the earned income amount.
2. Depletion deductions on the mineral income. This in USA tax law is recognized as a depreciation in the asset of the 'mineral assets in place'. I am reporting income for mineral royalty income after subtracting depletion.
3. The different tax year between the calendar USA year and the UK tax year to 05 April is a complicated accounting problem. I am having to accrue amounts for USA tax credits for one year and provide a correction to actuals on the following years return.
Can you advise on these matters, or can you suggest a tax accountant who I can work with near Woking, Surrey. Or does HMRC provide advise on these matters?