Foreign Bubble Assignment - Tax benefits?

Eremenko

Good morning all,

First time poster looking for some advice please.

I am a UK based employee, and a PAYE tax payer.  An opportunity has arisen to take on a bubble assignment with one of our branches in the USA.  I am looking to see if there could be tax benefits for me.

Length of secondment is of my choosing, so I could ensure I am out of the UK for more than half the year (183 days?).  Additionally. I could make sure I was in the US for less than half the year, and break it into a few trips if required.

Say I did 25 weeks in both the UK and US, and went somewhere random for the other two . .  would I be able to reclaim UK tax, and would I become liable for any in the USA?

Appreciate your help,
Erememko.

Jeremy535897

This is a very complex question. Here's a starting point:
https://www.gov.uk/government/publications/residence-domicile-and-remittance-basis-rules-uk-tax-liability/guidance-note-for-residence-domicile-and-the-remittance-basis-rdr1
https://www.gov.uk/government/publications/rdr3-statutory-residence-test-srt/guidance-note-for-statutory-residence-test-srt-rdr3
https://www.gov.uk/government/publications/rdr4-overseas-workday-relief-owr/overseas-workday-relief-rdr4

There are special rules dealing with working overseas. You also need to factor in that the US rules will be quite different, the US operates on a calendar year basis not 5 April as in the UK (so your 2 x 25 weeks is irrelevant), and the US-UK double tax agreement.

Cook_County

What kind of US visa will you have? 

Eremenko

Cook_County said:

What kind of US visa will you have? 

Hi … I’m starting from scratch so haven’t enquired yet.  I could go on a ‘short term business trip’ lasting less than six months, or go for slightly longer as an ex pat.

Our company positions folk abroad all the time, so has the experience and answers.  I was just trying for some self education prior to HR talks.

EdSwippet

As a former US resident, I would strongly suggest avoiding becoming any form of US 'tax resident', under the 'substantial presence test' (or any other test, for that matter). Once that happens, your entire UK finances get the full US tax treatment.

The US tax code hates anything foreign. This can create a lot of unwanted problems. For example, the US does not recognise UK ISAs as tax-free, and punitively taxes any non-US domiciled funds you hold.

My advice would be to stick to employment or other temporary visas, and make sure that you do not spend enough time in the US to become tax resident. If you aren't going to do that, you will want to reorganise all your finances and investments into things that will not give you nasty US tax problems before becoming entangled in the US tax net.