INcome tax repayment? US/UK

iceskater · Postby **iceskater** » Fri Dec 03, 2004 12:29 pm

I am currently teaching in the UK and do not pay income tax as I taught in the USA for 3 years and am tax exempt here in the UK. If I decide to stay I do not know what the ramifications would be, but think I have to pay back two years of taxes? That would be about Â£6000, I figure. Is there another option? Any help would be appreciated! I am Canadian if that matters?
Where should I turn???? Do not know much about the UK Tax System?????

Lambs · Postby **Lambs** » Sat Dec 04, 2004 5:39 am

Hmmm. Unfortunately, you are contemplating a quite complex area of personal taxation. It doesn't help that, by inference, you are actually a Canadian national and "started off" in Canada. I am quite surprised that you think that you are "tax exempt" here in the UK: most people who earn in the UK are taxable in the UK, no matter what their residence status.

I strongly recommend that you read the helpful Inland Revenue booklet IR20:

http://www.inlandrevenue.gov.uk/pdfs/ir20.pdf

and concentrate in particular on the section dealing with "visitors to the UK," i.e. part 3.

Note that there will be a Double Taxation Agreement between Canada and the UK, (or even the US and the UK, which might be relevant depending on the period of time which you have spent in the US), and these may well influence your position.

The IR20 booklet should however give you an idea of what's relevant: if you have any further queries, please append them to your original post.

You will need to give us an idea of

What work you do - particularly if it's a civil service or self-employed post
What periods you have been in the UK, or anywhere else for that matter, even if only short trips.

Regards

iceskater · Postby **iceskater** » Sat Dec 04, 2004 8:12 am

Well thabnk you for your response. I am a teacher. Taught for 3 years in the USA and have been teaching here since Septmeber 2003 under the USA/UK Double Taxation treaty. I would like to remain but do not know what to do as far as taxes go. I have only travelled to Scotland for five days and to Ireland for 7 days since coming to England. If you could direct me as to the preliminary stages and who to contact that would be a great help. I do not want to lose my shirt by staying in the UK (I. E. Paying Back Taxes).

Lambs · Postby **Lambs** » Sat Dec 04, 2004 2:38 pm

I think that the first thing to point out is, that whilst you might at some point be liable to tax in the UK, you would at least be given credit for the tax you have (presumably) paid in the US for those earnings.

Ordinarily, you would be liable to tax on earnings in the UK, regardless of whether or not you are resident in the UK. However, you have been resident in the UK for more than 183 days in the current tax year, (2004/05: the year ended 5 April 2005), and, depending on when you arrived in September, you may have been resident in the UK in 2003/04 as well.

Did you have the opportunity to read the IR20 booklet?
I'm afraid that I'm not so familiar with the UK / US Double Tax Agreement that I can remember why you aren't taxable in the UK already, and haven't been since day 1 - at least, not over the weekend! Does your position here constitute a Government appointment?

expattax · Postby **expattax** » Mon Dec 06, 2004 8:23 am

Hi Iceskater,

As you can imagine this is a complex area. The relevant Article you are refering to is Article 20A of the New Treaty.

The visit must be for less than 2 years and you must have been a resident of the USA immedidatley before coming here.

Thus if you reside here for more than 2 years, you are correct in thinking that you will have to pay tax here for the entire duration of your stay.

I hope this helps.

Kind regards

Mark J Hooper
US Enrolled Agent
mark@expattax.org.uk