# US to UK tax question(s)



## MikeD_ (Sep 4, 2014)

Hello Everyone,

My company is considering relocating me from the US to the UK for 2 years. They commissioned a company to do a cost study. The results were that over 50% of the total cost (beyond my salary) would be to cover US/UK taxes.

Is that normal? 

I was really excited about the opportunity but the costs make it prohibitively expensive. I know this happens regularly so I think it is possible that there is something wrong with the estimate. 

Would someone in this situtation be willing to share their general income/tax liability with me privately? Rounded numbers and generalizations are OK, I know I'm new but my motives are honest .

Lastly does anyone have a tax accountant/attorney that works on cases like this that could review some numbers and provide an estimate for a reasonable fee?

Thank you in advance for your advice and assistance.


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## Bevdeforges (Nov 16, 2007)

"Taxes" in Europe (which usually includes the UK, too) are simply higher than in the US - and usually by quite a bit. This is due to the "social insurances" more so than to the income taxes as such. (Then there is always the VAT, which they aren't figuring in at all - a sort of 20% sales tax on almost everything, which you most certainly WILL be picking up on your own.)

It depends on lots of things, but that 50% figure doesn't sound too far off. Here in France, for example, the employer's share of "social charges" runs nearly 40% of the employee's gross salary (and the employee is hit up for a bit over 20% as it is). Then, most expat arrangements include compensating the employee for local (UK) taxes in excess of what you would have paid had you stayed back in the US - and that gets complicated because any compensation like that has to be added back to your salary and thus is taxed, etc.

There may be an option for you to be paid from the US payroll, thereby avoiding the UK social charges for the first few years. You'd have to check the US-UK social security treaty for that - though the UK treaty is somewhat unique as those things go and may or may not include the option.

If your employer has offices in the UK, they should be able to explain the payroll system and what they have done in the past. But it always seems to be contentious because the charges add up pretty quickly in juggling two systems like that.
Cheers,
Bev


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## BBCWatcher (Dec 28, 2012)

Expanding on what Bev described, if you're "tax and income equalized" -- the norm for the "expat packages" in the good old days (sigh) -- then the employer's costs can pretty quickly escalate. Back in the dark ages -- before 2007 or so, before the Second Great Depression -- a lot of global multinational companies posting their employees overseas would try to provide total compensation that approximated the living standards (on an after-tax basis) those employees experienced in their home countries.

Imagine trying to re-create/simulate a mid-level executive's family's standard of living when posting that employee from, say, Atlanta to Tokyo. That's a big leap in company expense. A two car/McMansion/kids in private English schools/spouse previously earning income sort of lifestyle replicated in Tokyo is insanely expensive, really.

....Ah, those were the days.


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## Bevdeforges (Nov 16, 2007)

As BBC mentions, it can depend, too, on whether you're going to the UK on an "expat contract" or on the "local payroll." The trick is that many employers object to all the additional "payroll taxes" even on the local payroll. I guess you could say that there is a reason why salary levels in Europe are generally significantly lower than those in the US. 

On "local payroll" you'd cost the employer no more than if they hired someone locally to do the job (well, other than the relocation), but you'd probably be looking at taking a cut in your base salary. Being on an expat contracts includes whatever extra benefits your employer normally includes - like school costs for your kids, a car, housing assistance, etc. And one important thing to consider either way is some provision for relocating you back to the States should anything "go wrong" during the first couple years of your contract overseas. 

Transferring someone overseas really does get expensive for the employer - especially a US employer used to the relatively low payroll "taxes" in the US.
Cheers,
Bev


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## MikeD_ (Sep 4, 2014)

Thank you for the responses. In my case, I would be the first person my company is doing this with. Supposed some of our team has done this for other employees before at other companies but not here. 

I think they were shocked but the difference in tax rates, not even account for the National Insurance in the UK. My additional research shows that the estimates they received were fairly close. Unfortunately this makes it too expensive for them to move me. It is disappointing, I was really looking forward to the experience both professionally and personally. Only good news is that I will probably be going over fairly often.


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