KS123123
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Tax situation for American in the UK
Hello! I had a very helpful phone call with HMRC however the line cut out midway through the call, so I would like to share the answer I heard from the HMRC representative and receive confirmation that this is accurate. As background, I am an American and I moved to the UK in May 2024 on a family visa to join my British husband here. I work as a "Personal Services Contractor" for the U.S. Government in a fully remote role that allows for me to be based anywhere in the world. As a contractor for the US Government, my contract stipulates that "the Contractor is generally an employee of the United States for purposes of laws" and "This includes being an employee of the United States for the purposes of Title 26, United States Code, which subjects the Contractor to withholding for both FICA and Federal Income Tax, and precludes the Contractor from receiving the federal earned income tax exclusion of 26 USC Section 911." Therefor, US federal taxes are withheld from each of my paychecks. I asked the HMRC representative on the phone how to go about paying UK taxes and they said that the correct course of action here would be to claim foreign tax relief and pay HMRC the difference between what I paid the US Government and what I owe HMRC. So, for instance, if the US Government took $20,000 in taxes over the year and, if I were working for a UK company I would have paid $25,000 in taxes, then I should pay $5,000 in taxes to HMRC. Can someone advise me if this is accurate? Please let me know if you have any additional questions. Thanks! Kiley