Moving to the UK from US (LLC/tax advice)

[leryc]

Hello,

My wife and I will be moving to the UK in March and have a tricky question regarding taxes, LLC, and working in the UK. First off, my job will be the one that will get us over there on a tier 2 visa and will be valid for 3 years. My wife will be coming over with me and has a unique opportunity to contract with her current company that's based in the US.

We're considering registering an LLC so that she can begin to reap the benefits of being a small business owner. All of the finances would go through US financial institutions and would not touch UK financial institutions other than occasionally transferring money from our joint bank acct. Few questions:

1.) Do we need to report her income to the UK?

1b.) How do we stay compliant with UK tax law?

2.) Is there anyone (or organization) we can speak to that could provide a few answers for us?

3.) Does it matter which state we register the LLC? My parents live in Florida and it might be more advantageous to register there financially. (This might be more of a r/personalfinance question)

 

[littlequietsoul]

@leryc An LLC is considered to be just about the same as personal income in the US. You will get taxed on it and you will have to report it as foreign income in the UK but chances are there's a treaty similar to that of Australia where I live where you will pay taxes in the US but you'll also be required to pay taxes in the UK. However, whatever taxes you pay in the US will likely be accounted for when paying your taxes in the UK. Say for example at the end of the year you owe 5000 in the US and 10000 in the UK where I'm sure taxes will be higher, you will pay the 5000 to the US but only be liable for the other $5000 in the UK. If you are thinking of going back to the US and that income is not absolutely necessary, then maybe you should consider setting up a corporation, leave the money in the US and then pull it out of the corporation when you get back. Corporations are seen differently.

 

[trantrang2461]

@littlequietsoul Are you sure that's how it works? I'm 90%+ sure in that scenario the $10k that he pays to the UK will count as a foreign tax credit on your US return and make your US tax debt to be $0.

As to trying to "shelter" the money in the US, I'm 95%+ sure that doesn't work either. The UK doesn't give a fuck that it doesn't come into the UK, you made money, and you live in the UK, so, they want taxes from it.

 

[pausendream]

@trantrang2461 IANATA but depends on income source. His scenario is plausible if for example we’re talking about capital gains on stock bought and sold in the US.

 

[trantrang2461]

@pausendream Since a UK LLP and a US LLC are so similar, I very much suspect that they'll be treated the same i.e. passthrough

 

[emily120709]

@leryc regarding 1:

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

Yes. Very very yes. The has very strict rules about who is a tax-resident, and you could conceivably end up a "tax resident" even if you live elsewhere and visit a lot.

 

[johntf]

@leryc Consider also posting in r/ukvisa. They might be able to answer some of your questions