UK citizen working in Canada

bendee · 11 August 2018 at 12:35PM

I'm a UK citizen- I live in the UK- and have a US loan out company which I use when I work in the States. I've recently taken a 5 month job in Canada for an american company (I will be subject to the Canadian 23% tax at source) and have been advised to not use my US loan out but to put my earnings through the UK tax system. Apparently I will pay less tax this way (I will be subject to the highest tax rate in the UK). Can anyone tell me why I will pay less tax this way?

agrinnall · 11 August 2018 at 8:52PM

What did the person who told you that in the first place say was the reason you'd pay less?

jimmo · 11 August 2018 at 10:16PM

Never heard of a loan out company before but basically if you are resident in the UK you are chargeable to UK tax on your worldwide income but eligible for Double Taxation Relief in respect of any foreign tax paid.
In this case therefore the whole of the Canadian tax can probably be set against your UK liability.
If you work in Canada via your loan out company the company may be liable to Canadian corporation tax but will be liable in the US subject to any Double Taxation Relief. Presumably you are familiar with the tax issues of being paid in the UK by your loan out company.
I couldn't tell you whether using the loan out company for this work will cost more or less in tax overall but it will certainly cost more in red tape and accountancy fees. Apparently, as well as tax, you need to consider the loan out company's insurance and healthcare.
I would think the best person to ask is the accountant who handles the loan out company for you.

Cook_County · 12 August 2018 at 12:26PM

US loan out companies are common in the States but don't really make sense for most Brits. What kind of US visa did you have when in the States? What kind of entity is it? An LLC? A C-Corp?

UK citizen working in Canada

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