Earning Money in the US and bring it back to UK

sid · 14 Jul 2015 at 19:31

I know some people on this forum have worked in the US for a short period.
What is general situation in terms of tax for money earned abroad and brought back to the UK?

If I went abroad for a two year postdoc (legit job! with paid taxes!) and came back to UK with leftover money, would I need to pay any extra tax on that??

[TW]Fox · 14 Jul 2015 at 19:35

Your biggest problem is going to be getting a US Visa that actually allows you to do this. I can't imagine there is a tax issue with bringing money back.

sid · 14 Jul 2015 at 19:39

[TW]Fox;28311988 said:
Your biggest problem is going to be getting a US Visa that actually allows you to do this. I can't imagine there is a tax issue with bringing money back.

I did mention this will be a postdoc job. They will sort out visa.

randomshenans · 14 Jul 2015 at 19:41

You should technically be OK, if, as Fox says, you can get a visa to work there. Your salary will be paid in to a US account and you will pay your taxes on it. If you have any leftover, just keep it in the US account and move to the UK.

If you transfer money into a UK account, you will have to pay a tax on it, but I cant remember the rate. In switzerland it's about 100CHF per 100,000chf ha which is crazy.

sid · 14 Jul 2015 at 19:52

randomshenans said:
You should technically be OK, if, as Fox says, you can get a visa to work there. Your salary will be paid in to a US account and you will pay your taxes on it. If you have any leftover, just keep it in the US account and move to the UK.

If you transfer money into a UK account, you will have to pay a tax on it, but I cant remember the rate. In switzerland it's about 100CHF per 100,000chf ha which is crazy.

Ok yes that was indeed my question, how much tax would I need to pay to bring any money back?

asim18 · 14 Jul 2015 at 20:02

sid said:
Ok yes that was indeed my question, how much tax would I need to pay to bring any money back?

None really, it can easily be avoided which is legal. Evasion is illegal.

You won't have to pay any tax if you lend €10,000 to several of your "mates who aren't carrying any cash" before you jump on the plane.

You have to declare €10,000. If you got under that in your pockets you're doing nothing wrong. You're going to pay 17.5% tax on everything you spend it on anyway, it's a bit silly wanting to pay extra.

Also I believe you need to be resident in the UK while the money is coming in for it to be taxable. If you're residence was in the US while the money was made you won't need to pay any tax anyway (i think). It's for people who actually reside in the UK while pulling in the big $ from overseas, not for people who actually go and work while residing there.

Threepwood · 14 Jul 2015 at 20:12

https://www.gov.uk/bringing-cash-into-uk

If your money is legit, with an obvious and lawful paper trail, you simply declare anything over $11008 (at today's exchange rate) draw it from the bank, and bring it physically on home, with no tax.

It would still have to be legit for under that amount too..!

This is my take on things, could be wrong... how much are we talking?

sid · 14 Jul 2015 at 20:49

Threepwood said:
https://www.gov.uk/bringing-cash-into-uk

If your money is legit, with an obvious and lawful paper trail, you simply declare anything over $11008 (at today's exchange rate) draw it from the bank, and bring it physically on home, with no tax.

It would still have to be legit for under that amount too..!

This is my take on things, could be wrong... how much are we talking?

Well i don't have the job yet! but I imagine tens of thousands of dollars.

Phantom Shadow · 14 Jul 2015 at 21:05

https://www.gov.uk/tax-foreign-income

Since you won't be resident in the UK then you won't be subject to any UK income tax on the money you earn while away. I don't think there would be any tax on bringing it back into the country either, that would only occur if you were resident in the UK, earning income abroad (eg. rental income on a home in france while you live in the UK) and were non-domiciled where the income can sometimes only taxed upon it entering the country.

Threepwood · 14 Jul 2015 at 21:06

sid said:
Well i don't have the job yet! but I imagine tens of thousands of dollars.

Well, all the best and good luck on your quest.

Either way, you are going to end up paying a tax (thinking about it now) even if you come in with physical cash - you will be charged to exchange it from $ to £ at the bank.

Maybe do one thing at at time? Concentrate on getting the job first.. then concentrate on saving some wonga.. then concentrate on bringing it home to roost!

D.P. · 14 Jul 2015 at 21:15

[TW]Fox;28311988 said:
Your biggest problem is going to be getting a US Visa that actually allows you to do this. I can't imagine there is a tax issue with bringing money back.

No visa issue for an academic position.

D.P. · 14 Jul 2015 at 21:20

sid said:
I know some people on this forum have worked in the US for a short period.
What is general situation in terms of tax for money earned abroad and brought back to the UK?

If I went abroad for a two year postdoc (legit job! with paid taxes!) and came back to UK with leftover money, would I need to pay any extra tax on that??

It will be somewhat complex and will depend when you start in the US.

The first test would be to see if you are a resident or non-resident alien. The residency test basically sees if you lived in the US over 6 months during tax year (which in the US is a calendar year).

If you are a non-resident then you don't have to pay any federal taxes in that year upon proof of paying taxes in your resident country, UK. However, US taxes are cheaper so you don't have a big advantage in doing that. However, as a non-resident you will in general pay lower taxes anyway. Regardless of whether you are resident or not, you have to pay all other deductions like socials security and medicare.

The same largely goes for state taxes but the rules for those change state by state.

Once you are a resident saying full US taxes then you don't have to pay any UK taxes because for UK purposes you are living aboard and non-resident. The UK and US have a tax-treaty such that you wont be double taxed.

When you leave the US the same residency test will apply.

Heliospherez · 14 Jul 2015 at 21:23

I had a friend who was earning +£3000 a month (working 70 hours a week) abroad for many months - needless to say he had a considerable amount to transfer when he came back to the UK (as he didn't do much other than work)

Both the bank abroad and the bank in the UK wanted to know exactly what he had been doing as he had amassed so much money (in fact the bank in the UK actually stated the checks were to rule out money laundering

) - he paid a considerable amount of tax on it - but was able to put a big deposit on a house in the UK.

D.P. · 14 Jul 2015 at 21:28

randomshenans said:
You should technically be OK, if, as Fox says, you can get a visa to work there. Your salary will be paid in to a US account and you will pay your taxes on it. If you have any leftover, just keep it in the US account and move to the UK.

If you transfer money into a UK account, you will have to pay a tax on it, but I cant remember the rate. In switzerland it's about 100CHF per 100,000chf ha which is crazy.

You don;t have to pay any money to bring money form the US or CH to the UK.

I know, I have done both, and the inverse.

If you move a large amount then you will get some security questions form the bank., that is to tackle fraud. You might find HMRC/IRS interested in signified out where the money came form but as long as you have both proof that you earned it and paid the relevant taxes on it then there are no additional taxes left.

I moved around 50,000CHF to the UK without as much as a sniff. I moved 40,000 GBP from the UK to the US and I just had to answer a load of security questions and provide the us Mortgage provider proof that I had the money for more than 2 years. But then I had to show far more paper work for the rest of my US house deposit proving that I earned it, including: 24 months of salary payments, W4 tax statements, 24 rent checks, 24 months of bank history.

D.P. · 14 Jul 2015 at 21:33

Heliospherez said:
I had a friend who was earning +£3000 a month (working 70 hours a week) abroad for many months - needless to say he had a considerable amount to transfer when he came back to the UK (as he didn't do much other than work)

Both the bank abroad and the bank in the UK wanted to know exactly what he had been doing as he had amassed so much money (in fact the bank in the UK actually stated the checks were to rule out money laundering ) - he paid a considerable amount of tax on it - but was able to put a big deposit on a house in the UK.

I assume while he was abroad he wasn't a resident, otherwise there would have been no additional taxes needed.

If you are a resident of a foreign country you pay their taxes, you can shift around your net salary as you wish tax free as long as there is a double taxation treaty. A few exceptions apply, e.g. is you are a US citizen with passport then you are taxed globally, so whatever the difference is between local and US taxes you pay to the US. The UK doesn't have that, so if you live in the US/wherever and pay less taxes than the UK tax rate then you don't owe the UK the difference as long as you are a foreign resident.

D.P. · 14 Jul 2015 at 21:34

Threepwood said:
https://www.gov.uk/bringing-cash-into-uk

If your money is legit, with an obvious and lawful paper trail, you simply declare anything over $11008 (at today's exchange rate) draw it from the bank, and bring it physically on home, with no tax.

It would still have to be legit for under that amount too..!

This is my take on things, could be wrong... how much are we talking?

Phantom Shadow said:
https://www.gov.uk/tax-foreign-income

Since you won't be resident in the UK then you won't be subject to any UK income tax on the money you earn while away. I don't think there would be any tax on bringing it back into the country either, that would only occur if you were resident in the UK, earning income abroad (eg. rental income on a home in france while you live in the UK) and were non-domiciled where the income can sometimes only taxed upon it entering the country.

Spot on.

Destination · 14 Jul 2015 at 21:44

Phantom Shadow said:
https://www.gov.uk/tax-foreign-income

Since you won't be resident in the UK then you won't be subject to any UK income tax on the money you earn while away. I don't think there would be any tax on bringing it back into the country either, that would only occur if you were resident in the UK, earning income abroad (eg. rental income on a home in france while you live in the UK) and were non-domiciled where the income can sometimes only taxed upon it entering the country.

Precisely, you've paid the tax due on the money, in the US while you were in the US. The money is then yours to bring home. If more than 10K they might ask where it came from, but that will be easily answered.

sid · 14 Jul 2015 at 22:08

Ok thanks D.P.

This would be a 2-3 year fixed position so will be resident in the US for that time. I don't think I will have huge amounts of money leftover tbh.

CaptainRAVE · 14 Jul 2015 at 22:18

Did similar for a year - managed to spend most of it having fun out there...brought the rest back as cash. Then forgot to close my account out there - checked a few years later and had been charged an inactivity fee (everything incurs a fee on a U.S. account!)...luckily had left enough of a float in the account to cover it.

D.P. · 15 Jul 2015 at 00:55

sid said:
Ok thanks D.P.

This would be a 2-3 year fixed position so will be resident in the US for that time. I don't think I will have huge amounts of money leftover tbh.

If you start in say august then you won't be classed as a resident and will get to pay slightly less tax and have a slightly simpler tax form. If you start in June you will be a resident and will pay usual US taxes. The same thing but in reverse will happen when you leave.

Where will you be doing your postdoc?