US citizen paying tax in UK, declaring it additionally in the US?

BrunoM

Hiya,

my fiancee is currently on a 6 month visa and working here through a temp agency; she is having normal 22% type income tax deducted. We are about to marry which I don't think changes anything though we will be changing her visa for a longer duration settlement one.

a) I think in April she will be able to apply for a tax refund, as she only started working in November and her entire earnings Nov-March will be barely equal to the tax-free allowance?

b) her dad thinks she is obliged to fill out a tax return declaring the income earned here, back in the USA; pay tax on it there as well, then apply for a refund at the end of the tax year depending how much tax she had paid in the UK. Is this really true, does anyone know? Doesn't sound reasonable!

Thanks in advance if anyone knows how this works

Annando

Some countries sign a non dual tax agreement, whereby any income earned and taxed in country A cannot be taxed again in country B (does that make sense?). The US and the UK probably have such an agreement, if I were you I'd check with the American Consulate or the Embassy.

Hoddie_2

earned and taxed in country A cannot be taxed again in country B

Almost but not quite. If the person is liable for tax in both countries (this depends on residency and domicile status), any tax paid in one country will reduce the liability on that income in the other country. For example, say £100 was earned in the States and £19 tax was paid to the IRS. The £100 would attract UK liability of 22% (£22) but he would be credited with having already paid £19, so only an extra £3 would be payable in the UK.

It's an area where specialist advice is needed. He may not need to pay UK tax at all, and might be able to request HMRC issue the NT (no tax) code. I would advise he calls HMRC and asks to speak to a technician.

BrunoM

Thanks both - we'll try the US Embassy and the HMRC tomorrow for advice.

Astaroth

My former boss (and a couple of colleagues) were dual nationality of UK and USA and all of them had to submit a USA annual tax return but as Hoddie says, the tax they paid here in the UK was offset against their USA liability. In all of their cases as higher band tax payers in the UK the UK tax was always higher than it would have been in the states so nothing extra to pay but there are circumstances where this isnt the case