Second job working from home for an American company - Please help

coconutcurls
coconutcurls Posts: 213 Forumite
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Hi

I rang HMRC today and they gave me a partial answer, it would probably be another hour on the line to be transferred to a third adviser, so I decided to do some research before ringing again.

The situation: I found an opportunity to work from an American Company in customer service - part time PST time zone which is evening in the UK. I know the company since 2016, I have used them for a number of years (they sell / deliver their own courses) and I know the owners (not personally) so I am 100% sure it is legit. I have already asked them if they would consider someone in the UK, told them a have a day / main job etc, they encouraged me to apply. CV is now updated, cover letter is ready and one of my managers already agreed giving me a reference. All good.

Now, I need to assess the tax situation. HMRC told me today that I simply need to let them know once I start, either via phone or online and then I can carry on receiving my dollars from abroad. At the end of the financial year I then need to fill in a tax return declaring my earnings from my UK job and my earnings from my USA job, pay any due taxes and that is it, easy. I queried why I have to declare money from my UK job providing my employer does it on my behalf and discount my taxes and they said that is just how it is but I would definitely not pay tax twice for my UK job - hmmmm now I am worried, what if they make a mistake?

The other thing she said that worried me even more is that I might be double taxed from my USA salary, as in pay tax in USA and then in the UK...I thought that sounded a bit crazy, and I could not find any information on this but if that is the case, then it is not worth it. Does anyone know if I would need to pay USA tax too?

She wanted to transfer me to somebody else, but I couldn't stay on the line any longer. Hope someone here has or had similar experience and can shed some light.

Thanks


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Comments

  • comeandgo
    comeandgo Posts: 5,743 Forumite
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    I don’t know about your USA tax but you don’t pay tax twice on UK earnings.  When you complete your self assessment you enter your wages and tax paid to date .  If there are errors in your uk tax doing self assessment it’s usually because you have entered the wrong figure in wrong slot.
  • Ditzy_Mitzy
    Ditzy_Mitzy Posts: 1,851 Forumite
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    This has 'more trouble than it's worth' written all over it.  More information is here:

    https://www.irs.gov/businesses/taxation-of-nonresident-aliens-1#:~:text=Nonresident aliens are generally subject,or periodic (FDAP) income.

    but the gist is that you'll be a 'nonresident alien' for US tax purposes and will no doubt have to file an American tax return with the IRS, in addition to IRS form W8-BEN.  That will be done annually and, I think, income tax will be deducted in the States - the IRS page states that the nonresident alien will pay US tax in America on whatever the earnings are.

    The money will make landfall here as a gross amount (American tax being paid annually upon return filing rather than our PAYE), which will then need to be declared to HMRC on your UK tax return.  Unfortunately - don't quote me on this but it's more than possible - you will need to declare the gross income to HMRC rather than the net (i.e. net of US tax) as it won't have been taxed at that point.  

    American income tax is lower than ours, but still comes in at 10% on earnings up to $9,875 (possibly).  Add the UK 20% liability to that and you'll be looking at paying 30% before you've started; calculation assumes you are a basic rate payer here.  

    There is a British-American double taxation treaty, but its scope is rather limited in that it is geared towards American expats living here, rather than non-US persons earning American dollars offshore.  The IRS really don't like the latter, from experience, so tend to put up barriers.

    Bottom line: you'll more than likely end up being required to fill in two tax returns each year, as well as additional IRS documentation.  The IRS won't like what you are doing and may not be helpful.  You need specialist advice from an accountant or similar, rather than me, but my gut feeling is this will be a non-starter.  
  • Marcon
    Marcon Posts: 10,668 Forumite
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    At the end of the financial year I then need to fill in a tax return declaring my earnings from my UK job and my earnings from my USA job, pay any due taxes and that is it, easy. I queried why I have to declare money from my UK job providing my employer does it on my behalf and discount my taxes and they said that is just how it is but I would definitely not pay tax twice for my UK job - hmmmm now I am worried, what if they make a mistake?




    That's the basis on which self assessment tax returns are completed. Sign up to to do your self assessment online, and when you come to do it you'll find that the figures already reported by your UK employer are pre-populated for you, so you're worrying about nothing - it's done automatically.
    Googling on your question might have been both quicker and easier, if you're only after simple facts rather than opinions!  
  • @Ditzy_Mitzy

    Thank you so much! and nope, not worth it. More headaches than dollars. 
  • Ditzy_Mitzy
    Ditzy_Mitzy Posts: 1,851 Forumite
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    @Ditzy_Mitzy

    Thank you so much! and nope, not worth it. More headaches than dollars. 
    That's all right.  In a previous life I had occasional dealings with American expats and the like; their advice was always 'never have anything to do with the IRS if you can avoid it'!  
  • JGB1955
    JGB1955 Posts: 3,479 Forumite
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    One of my neighbours works for an American company from 17:00 to 22:00 every evening.  She also has a part-time  day-time job.  Doesn't seem to have had any issues combining the two.  
    #2 Saving for Christmas 2024 - £1 a day challenge. £131 of £366
  • DullGreyGuy
    DullGreyGuy Posts: 10,380 Forumite
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    JGB1955 said:
    One of my neighbours works for an American company from 17:00 to 22:00 every evening.  She also has a part-time  day-time job.  Doesn't seem to have had any issues combining the two.  
    That also depends on if she is doing everything correctly. 

    Plenty of people get stung for considerable sums because they did things out of ignorance rather than tax evasion but that doesnt stop the tax being due and some of the penalties for late payment. 
  • Ditzy_Mitzy
    Ditzy_Mitzy Posts: 1,851 Forumite
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    JGB1955 said:
    One of my neighbours works for an American company from 17:00 to 22:00 every evening.  She also has a part-time  day-time job.  Doesn't seem to have had any issues combining the two.  
    Could it be possible that the neighbour is working for a British domiciled agent or representative of the American company?  It's pretty common for work to be outsourced via third parties, making the employees at the other end effectively onshore in the eyes of their own domiciles.  I've spoken to call centres in Canada and the like several times; they are owned and operated by Canadian firms and contracted to answer telephone calls originating in this country by British companies.

    Doing that is a damn sight simpler than attempting to be a de facto direct employee of an exclusively US domiciled firm.  
  • coconutcurls
    coconutcurls Posts: 213 Forumite
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    edited 10 March 2023 at 10:01PM
    JGB1955 said:
    One of my neighbours works for an American company from 17:00 to 22:00 every evening.  She also has a part-time  day-time job.  Doesn't seem to have had any issues combining the two.  
    Could it be possible that the neighbour is working for a British domiciled agent or representative of the American company?  It's pretty common for work to be outsourced via third parties, making the employees at the other end effectively onshore in the eyes of their own domiciles.  I've spoken to call centres in Canada and the like several times; they are owned and operated by Canadian firms and contracted to answer telephone calls originating in this country by British companies.

    Doing that is a damn sight simpler than attempting to be a de facto direct employee of an exclusively US domiciled firm.  
    Any idea how I can find such representatives or agents please?
  • saker75
    saker75 Posts: 343 Forumite
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    Instead of being an alien employee, would they consider you as a freelancer? That way they pay you as any other supplier and you only deal with HMRC. 
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