[MinnesotaInLondon]

Hello everyone! I posted this thread in the general forum and was steered in this direction for more specific help.

I am going to the U.K. next month on the VAF4A settlement visa as an unmarried partner. I am currently employed by a company in the U.S. and work from home. Is it possible (and legal) to continue to work for the American company while living in the U.K. on the VAF4A visa? I assume I will have to pay taxes to the U.K. government, but will I also have to pay to the U.S., thus getting taxed twice? Is there something to do with being required to live 11 months out of the year in the U.K.? I have asked a few people in a similar situation and have gotten different answers, so I'd like to be sure. Any help you can offer is greatly appreciated. Thank you!

 

[DavidMcKeegan]

Well you would have to speak to a UK accountant to know for certain how your income would be taxed, but in general if you are in the UK for more than 183 days (or intend to be there for more than a year), they will consider you a resident for tax purposes, and you will be taxed on your worldwide income there.

Fortunately there is a tax treaty in place between the US and the UK, so the odds of you facing double taxation are slim. In most cases you can claim a Foreign Tax Credit for any taxes you have already paid to the UK. As the rates in the UK are higher than in the US, the credit should wipe out any tax liability.

One more thing to remember would be to obtain a Certificate of Coverage from the UK once you start paying into their Social Insurance Program. This will keep you from having the pay SE taxes again to the US.

I hope this helps and good luck!

 

[MinnesotaInLondon]

Thanks for the reply, David! That is good news to hear. Another thing to note is I am self-employed; will this affect my tax situation at all?

 

[Nononymous]

I'm not expert with respect to the UK, but I think the general advice you'll get is a along these lines:

If your UK settlement visa permits you to work, then I assume you are free to work however and for whomever you wish - working remotely for a US client or employer should be perfectly okay. But you should confirm that this visa permits employment.

You will be resident in the UK so that is where you will pay tax and social insurance and all that. The standard advice is to set yourself up as a self-employed consultant and bill your US client then file your UK taxes.

As a US citizen you have an obligation to file US tax returns. With the tax treaty and the various exclusions you will almost certainly owe the US no money - just paperwork.

 

[MinnesotaInLondon]

That's brilliant. Thank you both for the helpful info and for putting my mind at ease!

 

[Bevdeforges]

Let me just add that you will probably be able to choose between the Foreign Tax Credit and the Foreign Earned Income Exclusion when it comes to shielding your "earned income" (i.e. salary and similar income) from double taxation.

I don't know what business entities are available to you in the UK, but if you were to work through a UK business structure of some sort, with the company/business paying your UK social insurances and such, you could be considered the employee of your own company - which makes life a bit simpler when it comes to sorting out "self-employment tax" and other tricky things on your US forms.

I think both the US and UK have problems with someone working as a "contractor" with only one client/customer, though there may be ways around that as long as you're paying your proper social insurances and income taxes to your country of residence.
Cheers,
Bev

 

[Nononymous]

A quick bit o' googlin' told me this about the UK settlement visa:

Terms of leave

If your application is approved, you will gain entry clearance as a fiancé(e)/proposed civil partner.

You will initially be admitted to the United Kingdom for 6 months.

You cannot take up employment until after the marriage or civil partnership. Once the marriage or civil partnership has taken place, you will need to make a further application to the Home Office to request a variation of your visa status from fiancé(e)/proposed civil partner to that of a spouse or a civil partner.

Once this application is approved by the Home Office, a 2-year probationary period visa will be granted. During this time, you can live and work freely, but you will not be able to claim public funds. After satisfactory completion of the 2 year probationary period, you will need to apply for Indefinite Leave to Remain in the UK.

After 3 years and assuming the marriage/civil partnership is continuing, you may make an application for naturalisation as a British citizen.

So, strictly speaking, you could not legally work in the UK until after the marriage or civil partnership, and a successful application for change of status. Of course the delightfully fishy thing about remote work is that it's very difficult to detect. If, for example, you couldn't get to the town hall to do the deed for a few months, it likely wouldn't be too sinfully wrong to continue working online and just leave the money in the US.

 

[MinnesotaInLondon]

Thanks for that, Bevdeforges. I will research the Foreign Earned Income Exclusion and Foreign Tax Credit and find out which is best for my situation, as well as look into becoming my own company - what a thought! It's also helpful to know about making sure to have more than one client - I will try to get work with other companies to diversify a bit. All very helpful, thanks!

Nononymous, I believe that since I am entering the country as an unmarried partner of a U.K. citizen with no intention to marry (not entering on the "fiancé visa") then I am allowed to work. I think the restriction on working is only placed upon you if you are planning to marry shortly after entering. Since I am an unmarried partner and we have no plans to change that status at the time, I think I am allowed to work as soon as I enter the U.K. But if anyone has more information on this, please feel free to chime in!

 

[DavidMcKeegan]

Being self employed does change things a little bit, but that is where the certificate of coverage comes in to play. The FEIE will not exclude you from paying SE taxes, but as long as you can show (with the Certificate of Coverage) that you are already paying them to the UK....you won't have to pay again to the US.

 

[Nononymous]

Nononymous, I believe that since I am entering the country as an unmarried partner of a U.K. citizen with no intention to marry (not entering on the "fiancé visa") then I am allowed to work. I think the restriction on working is only placed upon you if you are planning to marry shortly after entering. Since I am an unmarried partner and we have no plans to change that status at the time, I think I am allowed to work as soon as I enter the U.K. But if anyone has more information on this, please feel free to chime in!

I would ask the folks who have the final word on whether you're allowed to work or not - the UK government. Not something I'd want to trust to assumptions or random internet advice. In other words - call the consulate.