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Sam
Sam, Accountant
Category: Tax
Satisfied Customers: 13947
Experience:  26 HMRC expertise, PAYE, Self Assessment ,Residency, Rental Income, Capital Gains, CIS ask for Sam Tax
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I am a uk citizen but I will be moving to Los Angeles on an

Resolved Question:

I am a uk citizen but I will be moving to Los Angeles on an E1 Visa in December for a year to set up the US office of our company. The plan is for me to be paid by the UK company while I am there so where do I pay income tax ? Do I pay it here in the UK or in the US ?
Submitted: 2 years ago.
Category: Tax
Expert:  Sam replied 2 years ago.
Hi Thanks for your question How long will you be working and living in the USA - and for that duration, what visits do you think will be likely back to the UK during that time, and will any of these be for work purposes.And what remaining ties will you have in the UK, owned property (If so will this be let out) family, such as partner or children and will the plan be for you to return to take up UK duties in due course? I can then advise the residency position which is what affects where tax is due. ThanksSam
Customer: replied 2 years ago.

Hi Sam,

I am heading out initially for 1 year, however the plan ois to leave this open so that if I wanted to stay on for longer I could do, but 1 year will be the minimum.

I have a house in the UK that I will rent for the duration that I will be away and I have a mortgage on that house. I will be visiting the UK approximately every 2 months, I would expect half of these visits (3 visits) would be for pleasure and the other half would be for work (catch up on product development etc...)

My partner will be moving out with me on the same visa and will be applying for a work permit seperately, we have no children. My parents will still remain in the UK.

It is expected that I will return to the UK company after leaving the US but right now i don't know when that would be.

I hope that is enough information.

Best regards,

Nigel.

Expert:  Sam replied 2 years ago.
Hi Thanks for your response and the additional information. Initially then you will be treated as remaining resident in the UK, which means you tax liability will remin in the UK, although I would expect you to file for US taxes whilst living and working there - which allows you to also claim credit for the USA tax suffered. The reason you would remain resident and liable to tax in the UK, is to be treated as NOT resident (and so not liable to UK tax ) you would have to be out of the UK for at LEAST a FULL tax year - so not just Dec 2015 to Dec 2016 - but to cover from Dec 2015 right through to 05/04/2017 (to incorporate the full tax year from 06/04/2016 to 05/04/2017) If you feel this is likely to take place, then HMRC would grant you non residency and furthermore, then advise the Uk employer to allow NT code (NO Tax) on this UK income (national Insurance remains payable for the first 52 weeks) However the fact you will also return to the Uk for work purposes furtehr clouds the issue - as you will remain liable to tax on that element of income, and IF the combined visits are more than 90 days (for work and pleasure) then you will be remaining as liable to tax here anyway. AS the situation is not so clear cut - my advise is that you alert HMRC that you are taking this position abroad, and do this by completing form P85 - link here for this formhttps://www.gov.uk/government/publications/income-tax-leaving-the-uk-getting-your-tax-right-p85with things are you see them initially to be.This will mean that you pay UK tax as per now, but will at tax year end - fill in a self assessment tax return (which will be needed due to the rental income position) and can then advise1) the amount of days actually arising for visits to the UK and 2) Those contributory for work reasons (meetings or training are NOT counted for work purposes) 3) the income earned an any USA tax suffered - as you will need to register with the IRS Also re the rental income - as you will be anon resident landlord you either need to arrange for the tenants (or managing agent if you plan to have one) to deduct tax from the gross rents to pay over to HMRC OR register for the Non Resident Landlords Scheme Link here regarding this https://www.gov.uk/tax-uk-income-live-abroad/rentAnd how to apply for the scheme Same applies for your partner - if she spends more than 90 days a year in the UK - or the time abroad is for less than a full tax year - and if the property you will rent out is in joint names. Let me know if I can be of any further assistance. ThanksSam
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