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Sam
Sam, Accountant
Category: Tax
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I am a UK citizen and Phd student at Oxford University. I have

Resolved Question:

I am a UK citizen and Phd student at Oxford University. I have been living on a scholarship stipend of £1000/month until Sept last year. Since then (my scholarship expired) I have been paid £1150/month by my supervisors.
Last year I signed a contract with a consultancy firm to begin work once I complete my Phd, probably in March 2016, in their Chicago (US) office.
I was awarded a signing bonus as part of my work contract of US$25000 which I received this week. I won't receive any other financial compensation until I begin work in March 2016. 40% of my bonus was automatically deducted by the firm I am to work for.
My questions are:
1). Am I obligated to pay tax on my signing bonus? If so,
2). To which country? US? UK? or Both?
3). How much?
4). How do I go about doing this?
5). I also received a complicated "W2" form - what is this for?
Many thanks help!
Submitted: 2 years ago.
Category: Tax
Expert:  Sam replied 2 years ago.

Thanks questions
My questions are:
1). Am I obligated to pay tax on my signing bonus? If so,
Yes, as its an enhancement in the expectation you will work
2). To which country? US? UK? or Both?
In essence both - as its a payment coming from the USA, so has to be taxed by them, and you are currently 9at the time of the payment) a UK resident - so you also have a UK tax consideration, However as you have suffered USA tax, and we have a tax treaty with each other (UK and USA) then you can claim credit USA tax suffered so you do not suffer tax twice on the same income)
3). How much?
UK its the first £10,000 tax free - then remainder at 20% but you also have the amounts paid to you since Sept 2014 If you total income that needs to be considered then exceeds £41865 then 40% tax becomes due on any excess income.
4). How do I go about doing this?
You should register assessment with HMRC - link here to do this
https://online.hmrc.gov.uk/shortforms/form/SA1
5). I also received a complicated "W2" form - what is this for?
This is your advise notice of pay and any tax suffered (equivalent to UK P60)
Let me know if I can be of any further assistance.
Thanks
Sam
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