a US non-resident alien who is just about to become a US resident alien individual. The opportunity to make changes to arrangements while still a non-resident of the US should definitely be made, taking advice both from a financial advisor and tax specialists. What about UK planning? I have focused on US issues regarding pension contributions and plan balances, but wanted to go back to basics and point out that the primary objective for establishing pension balances is to defer taxation on income and achieve tax free growth. Because the UK taxes on employment income generally exceed the US federal taxes on employment income, a pension contribution which saves UK tax is often beneficial even if there is no US tax savings. The excess tax credits created by the differential in tax rates can be used to minimise or eliminate any corresponding increase in US tax for non-deductible contributions. And where tax free growth can be achieved for both US and UK tax purposes, this can be worth the extra headache of additional reporting. This is especially true now the benefits of the remittance basis have been reduced and
the highest rate of UK tax is at 50%, subjecting more UK residents to higher taxes. Should you wish to discuss any points in this article, or you have any concerns surrounding your UK and US tax reporting, please contact our team at: mail@frankhirth.com. n
By Carol Hipwell of Frank Hirth plc Telephone 020 7833 3500 Enquiries email: Mail@frankhirth.com W: www.frankhirth.com Carol Hipwell - CPA Carol is an Associate Director in the Personal Tax Group. Carol specialises in a wide variety of US personal tax planning and compliance matters. After graduating from the University of Minnesota
in 1984, Carol worked for Arthur Andersen & Co in Minneapolis and then in Brussels, before moving to the UK in 1990 to join Ernst & Young LLP. In 2002 Carol left to develop a US tax practice within Chiltern plc, which became part of BDO LLP in 2007. Carol joined Frank Hirth in February 2010 in her capacity as a senior tax professional and Associate Director.
Carol Hipwell, and her colleague Gillian Everall, will be presenting at The 2012 Corporate Relocation Conference & Exhibition at London’s Hotel Russell in Bloomsbury on 6 February 2012. They will be discussing tax planning essentials for expatriates in the UK and covering residency and taxation for non-domiciles living in the UK, including what is meant by non-domicile status and the taxation choices currently available. To reserve your free place email helen@theamericanhour.com
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