Help! Contracting with US company while in UK

[MissT]

Hello,

I am a young professional working in the tech industry. I have been with my current employer almost 3 years. Recently, my manager who is based in California left to go to another company. He would like to poach me to work at his new place, however his current company does not have a UK base.

He has suggested that I contract for them, with an agreed day rate. I have been investigating the limited company route and umbrella companies. We are currently in discussions on the best way to contract/hire me, making it as easy as possible for his new company, which currently only has US based employees.

He has asked that I research agencies based in the US that his company can invoice, then pay me? I am not sure if this is possible. I have never contracted before, so I am not well versed in the appropriate way to proceed.

Any advice would be appreciated!

[jamesbrown]

You have a few options. One is to ask HMRC to set-up a PAYE direct (DPNI) scheme whereby your US employer will pay you directly and you will then pay tax and EeNI, without any deduction of ErNI. This could be the most tax efficient employment option, but it is an uncommon approach.

The other is to pay tax via your SATR. From the UK side you will be self-employed (a sole trader), effectively, even if you have an employment contract with the US employer.

You could also operate this via an umbrella, which may be less tax efficient because you will also pay ErNI and AL, but it will also be less hassle. If going that route, contact lucyclarityumbrella because Clarity comes highly recommended here and they can probably handle US clients (many umbrellas will not).

Finally, you could create a company and invoice your client, either on an inside IR35 basis or outside, depending on the facts, but certainly inside if it's an employment type relationship. If inside, I would go with an umbrella instead.

Make sure you have the contract checked (whether an employment contract or not) and make sure you understand the risks, especially if this is a non-employment type contract because US companies are notoriously litigious and you will need good PI cover.

Also, you cannot do any "productive" work in the US without an appropriate immigration status (e.g., green card or work visa, not a B visa or visa waiver).

[hobnob]

Welcome to the forum. I've been looking into a similar situation recently, although I'm only at the early stages of the process.

If the US company doesn't have any UK branch then you'll be responsible for the IR35 determination.

You will need to give a form to your ex-manager's company, so that they don't deduct 30% as tax. (I.e. this is their evidence for the IRS.) You'll either need W-8BEN (as an individual) or W-8BEN-E (for a company). For the company version, you'll need an Employer Identification Number (EIN) from the IRS, which requires form SS-4.
NB If your limited company only has 1 director/shareholder then it doesn't count as a corporation by US standards, so you'll also need form 8832.

The simplest approach is probably to get paid as an individual (via W-8BEN) and then declare this as extra income when you submit your SATR (Self-Assessment Tax Return). Make sure that you set aside some money to cover the income tax!

You'll probably want to set up a Wise account (formerly Transferwise) so that you can get paid in US dollars without incurring high fees for currency conversion.

I assume that you're a UK citizen; if you're a US citizen then it gets more complicated!

Here's a bit of extra reading for you:
https://forums.contractoruk.com/acco...es-to-usa.html
https://forums.contractoruk.com/acco...sa-client.html
https://forums.contractoruk.com/acco...n-content.html
https://forums.contractoruk.com/acco...en-e-form.html
https://forums.contractoruk.com/acco...ax-issues.html
https://forums.contractoruk.com/acco...ount-wise.html
https://forums.contractoruk.com/busi...-the-uk-2.html

It's worth searching this forum via Google to get more info.

[lucyclarityumbrella]

You could also operate this via an umbrella, which may be less tax efficient because you will also pay ErNI and AL, but it will also be less hassle. If going that route, contact lucyclarityumbrella because Clarity comes highly recommended here and they can probably handle US clients (many umbrellas will not).

We can indeed, as long as you are based in the UK then we can invoice an American company, we can also help calculate the rate you would need to use in order to receive the equivalent salary if they were going to pay you as a normal employee if they had a base here. Let me know if you need any help

[OwlHoot]

.. I assume that you're a UK citizen; if you're a US citizen then it gets more complicated! ..

Complicated and very expensive I think, because won't she have to pay US and UK taxes?

[jamesbrown]

Yes, the US is one of (two?) countries that tax on the basis of citizenship, not residency. It need not be massively more complicated, even for a UK company director, but it is definitely significantly more complicated. Anyway, I doubt that applies to the OP given the context provided (random person moves to US to work with random company and wants to continue working with OP).

[northernladuk]

Wrong part of the forum to ask. This is a bearpit of anything goes. You need to be in the professional parts of the forum.

You could also try the search function as this has been asked before. In google type <keywords> site:forums.contractoruk.com

The below link is your title used in the search. Have a play with different keywords.

https://www.google.com/search?q=Cont...hrome&ie=UTF-8

[jamesbrown]

Wrong part of the forum to ask. This is a bearpit of anything goes. You need to be in the professional parts of the forum.

Right, but only if you're a massive ****** because the post was clearly a professional one. We aren't children (mostly)

[Zigenare]

Wrong part of the forum to ask. This is a bearpit of anything goes. You need to be in the professional parts of the forum.

You could also try the search function as this has been asked before. In google type site:forums.contractoruk.com

The below link is your title used in the search. Have a play with different keywords.

https://www.google.com/search?q=Cont...hrome&ie=UTF-8

Yep, she's likely to get savaged by Lambchop!

[darmstadt]

I did this previously for 8 years and 4 years and have now been doing it for a US company for the last 7 years although I'm not in the UK so can't answer about IR35 or tax however why should an agency get involved? For one contract I just sent an invoice in to the company and they sent me a cheque back (you can see that was a long time ago!) and now I just send an invoice to the US company and they transfer the funds to my bank account and it is up to me to sort out all deductions, surely you can do that in the UK too? My transfer is performed by Western Union as it works out cheaper by Wise and is there a few hours after they receive the invoice. I think jamesbrown answered it best....