I (American) will be transferring to the UK for a 2 year work assignment in January (from the US) and will be on a Tier 2 visa. My spouse (Canadian) will be coming with me through a Tier 2 spouse visa. He currently works remotely for a company in the US (he has a work visa to do so). He intends to continue his work remotely while we’re in the UK. His company does not have any presence in the UK and as such, he will continue to be on a US payroll (we will be maintaining our house in the US while on this assignment). To further complicate matters, his employer would prefer that he continues to be employed through them and not self-employed as a contractor. What will we need to consider from a UK tax standpoint? If he is liable to pay taxes in the UK, how would one do this?
1 Answer
If your spouse is tax resident in the UK then they will be liable to pay UK tax on their foreign income. If he is living for more than half the year in the UK, he will almost certainly be tax resident in the UK.
Most people in the UK do not complete a tax return, because their tax is automatically deducted by their employer (pay as you earn). However, people with more complex income, including those with foreign income, need to complete a self-assessment tax return. Your spouse should register for self-assessment when they arrive in the UK. He will declare what his foreign income is, and will then need to pay whatever tax is owed on it at the end of the tax year, in arrears. There is also the possibility of estimating tax in advance and spreading out payment over the year, if he prefers to do this.
Both the USA and Canada have double-taxation treaties with the UK. Therefore, he ought not to have to pay tax twice on the same income. But you might need to speak to an accountant to work out the best way of filing taxes, if he is indeed liable in multiple countries.
