Confused about tax when not a resident anywhere

carmen_blue

My husband and I are leaving the UK the end of this year with our two small children. He earns monthly royalties as a photographer (roughly £2k a month). The company that pays him is based in the States - they put the money into his UK bank account and he pays tax as normal over here (which the IRS are aware of). Before settling in the States (I'm American, he's English), we'll be travelling around Europe for three months. We will officially be 'fiscal nomads', a term I've just learned. As he will not yet be an American green card holder and as we will officially be non-residents of the UK, does this mean he can assume that he does not have to pay any tax on these royalties for those three months we're traveling? On a similar note, he has some savings in the UK - does it sound sensible for him to open an offshore account for those three months while we're travelling so as not to be taxed on them?

fengirl_2

Assuming he will be out of the Uk at least until 5 April 2012, then he is not resident in the UK and not liable to UK tax on his US earnings - it does not matter which bank they are paid into. His savings income in the UK is eleigible to have his personal allowance set against it.

carmen_blue

Thanks, Fengirl. Do you mean April 2011? We're leaving this October for good, but my husband's family is here so he'll be back for the occasional short (week long or so) visit. His first visit would probably start next year. His savings are a little more than the personal allowance - what are your thoughts on an offshore account?

TM1976

He needs to be out of the Uk for a whole tax year to be non resident - so it is April 2012. He can come back for short visits but it can't be for more than 91 days on average per tax year or 183 days in a single tax year.

Providing his savings INCOME doesn't exceed his personal allowance he won't pay any UK tax, ie he doesn't get more than £6,475 per year in interest.

This info is right for UK tax however he should find out about his position regarding US tax.

carmen_blue

Ahhh, I get it now. Thanks.

Yes, the US tax is a minefield. He won't have his green card until early 2011, but once he does, he has to report on his worldwide income, so we'll probably move all his savings over to the States. Also, I don't know if they'd try to get him for back taxes while we're on our trip around Europe. I can't see how they could though. Thanks again for your help.