# UK/US Citizen working for US employer looking to move back to the UK



## sruzgar (Dec 17, 2015)

Sorry if this has been covered before but could not find any recent info. Im originally from the UK and have been living and working in the USA for the last 15 years during which time I became a US Citizen.

I currently work for a US based company and am looking to potentially move back to the UK, currently the US company does not have a UK entity (I say currently because this is something they may have in the next year or two) as such they said that I would have to become a contractor which is something I have no clue how to go about.

Has anyone else been in this situation that can offer some advice and guidance on this matter?

Thanks in anticipation


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## Bevdeforges (Nov 16, 2007)

Your nationality status doesn't have anything to do with your situation, other than the fact that you won't need a visa of any sort to move back to the UK.

Basically, if you are living back in the UK and doing work (whether for a US company or a UK company) you are "working in the UK" and thus are subject to UK work and tax laws. (As a US citizen, you're also subject to all the usual US reporting requirements for taxation, but that's neither here nor there in this discussion.)

If your employer doesn't have a UK office, it means they are not registered for UK tax purposes and thus can't handle the "usual" withholding and reporting stuff for you in the UK. Therefore, they are proposing that you work as a contractor until they get a UK office up and running. You'll have to establish yourself as a "contractor" over in the UK (assuming you'll be living there), under the UK rules - which relate mostly to how you'll pay your taxes and social insurances. The one sticking point is that the UK, like the US, tends to eye one-customer contractors with a very jaundiced eye. (It's a popular scam for employers to avoid having to pay their share of social insurance fees.)

You may want to ask over on the British section of the forums here exactly how to go about setting up as a contractor in the UK (which agencies you have to register with, etc.) and just how to work with the issue of being a "one customer" contractor - or if there is some way to work things out as a "forerunner" of your employer's eventual UK offices.
Cheers,
Bev


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## sruzgar (Dec 17, 2015)

Hi Bev,

Thanks for your response, its greatly appreeated. Given that they cannot do the "usual" withholding and reporting could I not just do that on my own, so have them still pay me in the USA and I file my own UK tax reutrn and take care of all payments? does that make sense?

Thanks again


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## Bevdeforges (Nov 16, 2007)

To some extent you "could" do it that way - except that you need to be careful how you handle it. Technically, you should only be paying income tax to one country or the other (either the US or UK), and in your case it would be the UK as long as you are resident there. You can claim back all US Federal taxes withheld, using either the FEIE or the Foreign Tax Credit, though the timing (due to the April to April UK tax year) may cause some mismatch of the credits involved.

The trick really comes in with the social insurances and state taxes. If you are living in the UK, you should be paying into the UK social insurances system, but it can be difficult to impossible to get back the US social security being withheld. There is usually a way that you can be exempted from UK social insurances for up to five years, however, this involves continuing your US benefits, including medical, which may or may not be what you want to do.

Then there is the matter of state income taxes. Some states recognize the "working overseas" rules and others don't, plus you'd be maintaining your state residence which you may or may not want to do.

Ultimately, it would probably come down to pretty much the same as just drawing your US pay check but functioning in the UK as a "contractor" (or "self employed"). I would seriously ask your employer to pay for (or at least contribute generously to) some sort of tax assistance from an international accounting firm. It could be tax preparation or just their council in setting up whatever arrangement you make. These situations can get very complicated very quickly - and ultimately may wind up costing you money and benefits if you're not careful.
Cheers,
Bev


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