30% US Withholding Tax
Discussion
Found the answer here on this super-helpful website in case it helps others: https://tipalti.com/what-is-w-8ben-e/
W8-BEN form completion and submission is the way to go. By doing so, you will declare that you are a USA non resident alien for USA tax purposes. I have been doing this every five years (form expires after 5 years) for maybe 30 years because I have dividends paid by a USA headquartered company that I pay into the UK and are subject to UK tax.
Note that whether or not the USA income is remitted to UK is irrelevant: HMRC require such income to be taxed in the UK on the arising basis
Note too that completion of the form means that the USA withholding tax of 30% reduces to 15%, (you do not escape USA tax entirely, but see next para) so you can then remit a larger amount of the USA gross pay to UK.
When you complete your UK SA, you will need to fill in the Foreign Section too, and insert the amount of USA gross earnings you have been paid and the withholding tax that you have had deducted from those earnings. You will be liable for UK income tax on your USA gross earnings on an arising basis. The withholding tax you declare via SA will be offset against your total UK income tax liability so, in effect what you have paid in USA tax is "collected back by you" via the UK SA system.
R.
Note that whether or not the USA income is remitted to UK is irrelevant: HMRC require such income to be taxed in the UK on the arising basis
Note too that completion of the form means that the USA withholding tax of 30% reduces to 15%, (you do not escape USA tax entirely, but see next para) so you can then remit a larger amount of the USA gross pay to UK.
When you complete your UK SA, you will need to fill in the Foreign Section too, and insert the amount of USA gross earnings you have been paid and the withholding tax that you have had deducted from those earnings. You will be liable for UK income tax on your USA gross earnings on an arising basis. The withholding tax you declare via SA will be offset against your total UK income tax liability so, in effect what you have paid in USA tax is "collected back by you" via the UK SA system.
R.
Is this a one off? You need to be very careful with US earnings etc
Some UK financial institutions will flat out refuse to deal with you with US connections of any sort. If it’s likely to become more frequent seek some decent tax advice before going ahead and suffering potentially pita consequences.
Some UK financial institutions will flat out refuse to deal with you with US connections of any sort. If it’s likely to become more frequent seek some decent tax advice before going ahead and suffering potentially pita consequences.
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