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bigduckontax
bigduckontax, Accountant
Category: Tax
Satisfied Customers: 4427
Experience:  FCCA FCMA CGMA ACIS
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In 2012 and 2013 I was working in the USA and was tax resident

Customer Question

In 2012 and 2013 I was working in the USA and was tax resident in the USA. I opted to defer part of my salary for payment after I retired. I returned to the UK in June 2013 and have not worked since. I passed my 65th birthday in January 2014 which was the trigger for payment of my deferred salary. It is being paid in monthly US$ installments over 10 years. Does this income require to be declared on my UK tax return (I recall an ask the expert response which I read in The Telegraph circa 2012 that it does not but I cannot trace the article)?
Submitted: 2 years ago.
Category: Tax
Expert:  bigduckontax replied 2 years ago.
Hello, I am Keith, one of the experts on Just Answer, and pleased to be able to help you with your question. If you are resident in the UK for more than 183 days in any tax year then your world wide income is liable to UK Income Tax. Thus the receipt of the deferred salary must be declared on your self assessment tax return. Under the Double Taxation Treaty between the UK and the USA, and several individual States as well, you can only be taxed in one jurisdiction on the same income flow. This is achieved by means of tax credits so any tax deducted in one country is allowed as a tax credit in the other. Thus if these emoluments are taxed in the States before payment then the tax credit rules apply. The Treaty does not protect you from differences in rates of taxation. I do hope that I have helped you with your question.
Customer: replied 2 years ago.
The income is taxable in the USA but as it is a relatively small amount ( ~$5000 per year) it falls below the taxable personal threshold and therefore no tax is paid in the USA. This presumably has no effect on the need to declare it in the UK where I am tax resident.
Expert:  bigduckontax replied 2 years ago.
No, you still have to declare that income. You do, of course, have your personal allowance of 10.6K to offset this tax liability.
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Expert:  bigduckontax replied 2 years ago.
Thank you for your support.