tax implications of earning UK GBP while living and working remotely from USA?

Question

My husband will be living with me in the US on a visa (he is a UK citizen). He will working remotely from the US as an independent contractor (self employed) for UK companies getting paid in GBP (£ pounds). He will do all work from US and never reside in the UK again. All of the GBP payments for his work will be transferred into USD almost immediately from his UK bank account. This will be our US income.

How will his taxes work?
He will obviously pay the majority of his taxes to the US, but will he have to pay any taxes to the UK?

Anyone have experience with this? or have any tips on finding an accountant who has this international knowledge?

Thanks very much

asif - He technically isn't working for British companies, he is working for himself in the US - providing a service for British companies who then pay him in GBP.

The foreign income exclusion only applies when you are both working and living abroad. His situation is different because he is living in the US but earning GBP from the UK.

Weather he is to be classed as working in the UK or the US, I don't know. Because is he actually physically doing the work in the US... so...

I mean, how do companies do it who outsource? I'm sure all of the companies who do call center outsourcing in India for US or UK companies do not get charged tax in the US or UK for that service provided in India.

You know?

oops *whether

Answer 1

Well atleast for US tax purposes, he would be classified as self employed/ independent contractor and his income would be fully taxable. As for the foreign income exclusion, such a law would apply in my opinion. After all, he is British and he is living and working abroad. It depends on what the tax laws for UK citizens abroad are. He probably would not have to pay any UK tax after taking advantage of exemptions. However, he may want to contribute to his country's social security system. I know the US has social security treaty with the UK, meaning that social security payments made in the US would be credited back to the home country. This is what I found on the website that most directly pertains to your question. It boils down to resident status,

"Q2. When I go to live or work abroad, will I continue to pay UK tax?
A2. If you remain treated as resident in the UK for UK tax purposes, normally you will be taxable on your income arising in the UK and overseas. If you are treated as resident and pay tax outside the UK we can give appropriate credit for any tax paid abroad.

If you become treated as non-resident, you will normally only be taxable on your income arising in the UK."

Note how they say they will give credit for taxes paid abroad, that suggests that there is an exclusion and there should be no double taxation.

Answer 2

1

Answer 3

Since he's legally in the US, there's no question as to the tax status of the income in the US. It's fully taxable.

As to the UK, since he's still a UK citizen it's entirely possible that his income will be subject to UK tax as well. He should contact HM Customs & Revenue in the UK for guidance. Here's a link to a FAQ on their site: http://www.hmrc.gov.uk/cnr/faqs_general.htm#2nr From reading through some of it, it appears that since it's UK source his residency won't matter and he will possibly continue to pay UK tax even if he never returns to the UK.

Answer 4

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