Hi Adam,

I’m a dual-qualified UK/US tax accountant from NYC. I recently created a non-profit company to assist expatriates with their taxes.

So, the first thing what we need to do is figure out your residency status for U.K. tax purposes. If you can answer yes to the two questions below, then you will be treated as a non-resident and are not subject to U.K. tax on income earned abroad.

• you left the UK to go abroad permanently or your absence and full-time work abroad lasts at least the whole tax year
• your visits to the UK are less than 183 days in a tax year and average less than 91 days a tax year over a maximum of four consecutive years

You are correct regarding paying U.S. federal and state taxes because you were present in the U.S. since 2005 and as a result automatically became a U.S. resident who has the same tax responsibilities as a U.S. citizen and therefore subjected to pay taxes on your world wide income.

If you’re a non-resident for U.K. tax purposes but the income is paid through a UK agent such as a bank in your case, you must file form PA1 or CA1 to make sure the financial institution doesn’t withhold U.K. taxes at source.

Regarding your dividend income; The U.S. and U.K. have a double taxation treaty which allows you to offset your U.K. dividend tax payable by the amount you paid here. However, you may never reclaim or reduce the 10% tax credit on dividends from U.K. companies.

What I really want to stress is the following; the necessity to file form P85 which is obtained at your local HMRC office. The form is used to determine if you will be a non-resident and to get any tax refund that you are owed. So, if you haven’t filed this form yet, it’s best to do so before you file a U.K return.

Hope this helps,

RRY