Job relocation causing issue with UK tax free benefit

lauraeast23

I worked for a company in the UK and relocated with the same company to the US.

One of the benefits was a share save scheme, I invested a certain amount a month and for every share I purchased the company matched on a one for one basis.

Providing you held these shares on a rolling basis for 5 years, when sold they would be free from tax and NI.

However when resident in the US for tax purposes you are liable to income tax on your worldwide income so I now face the issue that the benefit that I invested in is no longer of the same 'tax free' benefit.

This issue could mean a huge chunk being taken from me in US taxes that I was not made aware of at the time of the relocation.

1. Is there any way around it
2. Can I fight this with my company as they did not make me aware this would be an issue, even though I asked what would happen with these shares once I relocated.

Any ideas?

Thanks

somethingcorporate

Talk to your Stateside colleagues to see if they can suggest this, it is really a question about American taxes rather than UK so have you tried a US forum?

Alternatively, have you tried your own company to see what they suggest?

lauraeast23

I have the issue out there with my company but no response so far, though it's only been a week.

I have also raised it to my tax advisor but they were assigned to me by my company for my first years returns.

I'll find a US forum to see if anyone can help there, there is a good expat one I guess I could try

Thanks

cr1mson

As far as I understand it you would not be able to benefit full stop from this scheme anyway as you are no longer a UK resident for tax purposes.

xylophone

http://webcache.googleusercontent.com/search?q=cache:R32TP1IkDAQJ:www.hmrc.gov.uk/shareschemes/sip-info-employees.rtf+&cd=2&hl=en&ct=clnk&gl=uk

[B"]What if I move abroad?[/B]
If you are posted abroad, to work for the same company or a member company of the group, shares you already have can stay in the plan. When you are abroad, you may not be able to enjoy the tax advantages of the plan unless you are still subject to UK tax.

Your employer will still be able to offer you free, partnership, matching and dividend shares if he so wishes, but you may have to pay local overseas taxes and local social security contributions on their value. You should seek the advice of your employer or the Tax Office abroad."

is this relevant to your situation?

Cook_County

Hopefully you made a 7701(b)(4) election to be taxed as a full year US resident in the year of arrival and so have heaps of excess foreign tax credits carrying forward to set off against this income.