Author Topic: US citizen considering job move to UK  (Read 269 times)

BMEPhDinCO

  • 5 O'Clock Shadow
  • *
  • Posts: 78
US citizen considering job move to UK
« on: September 13, 2019, 01:11:59 PM »
Hello all,

Im having some anxiety about accepting a job offer and would like some advice....

Situation: Offered job for 45k - hoping to negotiate up a bit to 48k gross - it is a university. DH has a remote job in the US and would continue to work for them. We would move to UK full time in Nov. ish* (timeline still being decided on, have not received written offer yet).

My questions:
1. Would we be subject to taxes in 2019? Less than 183 days in UK....
2. When we do start paying taxes, would DHs income be subject to UK taxes? He would be coming in on my visa, but would live in the UK more than 183 days in a 365 day period.
3. Would DH be able to continue to contribute to his 401k and IRA in the US?
4. Would I be able to contribute to any of my US retirement accounts (Roth or trad IRA - have both right now)? Does that matter in terms of FEIE vs FTC?
5. Would we be able to contribute to our taxable investment accounts (Vanguard held at the moment) or would we need to get new ones in the UK? If we have them in multiple countries, can we combine them?
6. Would I have money taken from my check and put into a UK retirement pension? If so, can I control that amount? And could I access it at 65/whenever traditional retirement is? (Aiming for early retirement at 55-60, so I know this would be a later stage access)
7. For tax purposes, I know the UK is individual, but US is joint - which would it be here? How would our retirement contributions reduce any taxable income?

My biggest thing is that we need the ability to put aside around $4000 per month to continue on our current retirement plan. I want to be sure we can do that no matter where we live (we can incomewise, but not sure about all these taxes and investment things).

Thank you!

shelivesthedream

  • Magnum Stache
  • ******
  • Posts: 4700
  • Location: London, UK
Re: US citizen considering job move to UK
« Reply #1 on: September 14, 2019, 05:07:32 AM »
@Kwill and @katekat - do you have any insight?

Kwill

  • Handlebar Stache
  • *****
  • Posts: 1403
Re: US citizen considering job move to UK
« Reply #2 on: September 14, 2019, 07:29:48 AM »
Hi @BMEPhDinCO

I moved from the US to the UK for a job at a university back in 2016, and I've been navigating some of these things for a while. I'm on my own, so there are some of your questions that I don't have direct experience of. Some things will also depend on which university.

1. Would we be subject to taxes in 2019? Less than 183 days in UK....

You're always subject to taxes, but do you mean would you be eligible to exclude your UK income for US taxes starting from the first couple months you're there in 2019? I'm not sure. For the Foreign Earned Income Exclusion, you need to be a resident for a year, so if you moved here before 15 October, you could file with a six-month extension and use it. I've never done the Foreign Tax Credit, but maybe you could use that for 2019 taxes and then use the Foreign Earned Income Exclusion starting from 2020 when your residency would be clearer.

Your UK income tax and national insurance payments and so forth will be taken out automatically from your pay. The UK tax year goes 6 April to 5 April. You'll need to file UK self-assessment taxes for the 2019-20 year, but the paperwork for that doesn't need to start until about September, with online taxes due in January 2021. People will tell you that nobody needs to do self-assessment taxes, but you do if you have an international situation. Once you're set up with the system, it's not bad, but do look into various deadlines.

2. When we do start paying taxes, would DH’s income be subject to UK taxes? He would be coming in on my visa, but would live in the UK more than 183 days in a 365 day period.

This I don't know, but it's probably best to assume so and carefully look into it. There is an agreement to avoid dual taxation, but at minimum, you'll have some extra paperwork.

3. Would DH be able to continue to contribute to his 401k and IRA in the US?

I think so. He'll still have US-earned income.

4. Would I be able to contribute to any of my US retirement accounts (Roth or trad IRA - have both right now)? Does that matter in terms of FEIE vs FTC?

I think you can contribute to US retirement accounts if you use the FTC. If you use the FEIE, you can only contribute to the IRA from income that isn't excluded, which would be anything over $102,100 OR self-employment income that you can't exclude anyway. I do FEIE, mostly because it feels easier, but if I want more options for retirement savings in the future, I might switch to FTC.

5. Would we be able to contribute to our taxable investment accounts (Vanguard held at the moment) or would we need to get new ones in the UK? If we have them in multiple countries, can we combine them?

Mmm... This is such a hard one that there is a whole thread full of US citizens lamenting how hard the whole thing is. I decided to sell all of my taxable investments a couple years ago when I was putting together a deposit for a home purchase here, and now my retirement investments are exclusively in stocks and my taxable accounts exclusively cash with some interest. If you want to keep your taxable investments, I would suggest switching to UK-reporting ETFs and eliminating any mutual funds that the UK would penalise. You can find a list here, which is updated monthly by the UK government. Do that before you move, but keep in mind the move and immigration fees will probably be a big upfront cost that you'll want some cash for, even if something is ultimately reimbursed.

You didn't ask about costs to move. I think I ended up spending in the neighbourhood of $10,000 for one person including the fees for a 5-year visa, 5 years worth of immigration health surcharge, moving company, deposit on a rented room in the UK, UK-style passport photos, one-way flight, travel from Heathrow, etc. A lot of this was reimbursed for me, but it was scary to pay out a lot of money upfront before knowing if my visa would be approved or if I would be happy in the new job. The stronger dollar now would help keep some of the immigration costs in check, but you'll be paying for two people. The immigration health surcharge alone for two people coming on a five-year work visa would be 4,000. It'll be an additional 2,440 to apply for a tier-2 visa for yourself and your husband. I think that if you are coming long-term, these will work out to be reasonable costs, but you should just be aware ahead of time so that you don't tie up everything in retirement savings and then find yourself needing cash all at once.

6. Would I have money taken from my check and put into a UK retirement pension? If so, can I control that amount? And could I access it at 65/whenever traditional retirement is? (Aiming for early retirement at 55-60, so I know this would be a later stage access)

You'll probably be covered by USS. In my case, there's a defined benefit portion that the employer and I have to both contribute to, and there's no choices to be made about that. There's also a bit that allows voluntary contributions that I can invest in various funds pre-UK-tax (similar to a 403b). This is good because the rules around investing as a US citizen in the UK are so complicated that an employer-sponsored pension plan is the only place I can hold UK investments without IRS penalties.

7. For tax purposes, I know the UK is individual, but US is joint - which would it be here? How would our retirement contributions reduce any taxable income?

Maybe a married person will know about joint vs individual taxes. Retirement contributions to your UK employer plan may reduce your UK taxable income. For the US, I've been excluding my gross UK income before retirement contributions because it is under the limit either way.

Edit to add about the age: You should be able to use your UK employer pension from age 55, but the state pension isn't until later. The age may change. Actual UK people know this stuff better than I do.
« Last Edit: September 14, 2019, 07:33:45 AM by Kwill »

katekat

  • Handlebar Stache
  • *****
  • Posts: 1098
Re: US citizen considering job move to UK
« Reply #3 on: September 14, 2019, 07:47:07 AM »
Well, I am very far from expert here. For context, I am a UK citizen in the US, married to a US citizen who is back in the US after living in the UK. I am far from certain that all my tax affairs are settled and nothing I give here is 'advice', I certainly can't give answers to everything but I'll try to provide the insight I have. I would really advise that if you go this route you get expert advice in both UK & US and use any answers here purely illustratively. Everything I say should have a big bold I THINK BUT DON'T KNOW next to it.

Firstly -- you may have already considered this, but the "move to the UK and keep US remote job" is not exactly a simple issue on its own. Does the US employer have a UK branch that your husband can be switched to, even though remote, to be paid through PAYE and to take control of UK taxes? This would be the simplest solution. If not, to keep the whole thing above board, he will likely have to be self-employed in the UK and bill his company as a contractor. (I am aware there are probably a lot of people doing the 'remote work for US employer' thing in UK and NOT doing either of these things -- but these are the two strategies I've seen to make it 'legit'. I am not sure how/if those people are paying UK taxes, honestly)

1. Do you mean UK taxes or US taxes?
2. Yes, DH will be subject to UK taxes.
3 & 4. There's a lot to unravel here. Firstly, contributions to a US retirement plan will not reduce your tax liability in UK, which will (eventually, if not immediately) be your primary country of taxation, so probably not worth it even if you 'can'. Secondly, if DH is moved to a UK subsidiary, he will be offered a UK retirement account instead, and if he is a contractor he probably won't be offered any retirement account. If you get past those objections, I am honestly not sure if you 'can'.
6. Yes, unless you opt out (which is within your control) you will be contributing to a UK pension. Yes, you can control that amount. At the moment, pension access age is 55, though there is no guarantee it won't rise.
7. Which one would it be? Both -- individual in UK, joint in US -- it's best to think of US and UK taxes as two completely separate obligations that you have, even though there are things you can do in one to offset the other. I mean, they don't even run on the same year, so they can't be the same thing!

BMEPhDinCO

  • 5 O'Clock Shadow
  • *
  • Posts: 78
Re: US citizen considering job move to UK
« Reply #4 on: September 15, 2019, 10:04:20 AM »
Thank you @katekat and @Kwill! I can see this is complicated beyond what I thought. But all good to know and keep in mind as things to make sure are either in the offer or to use as negotiating items. We have lots in cash now, but Ill keep these numbers in mind.

I think the most important thing will be to pay for an expert the first year and get help learning everything.

Any other advice is also appreciated!