How can we avoid being taxed twice?
In this piece from the Financial Times, a London-based couple in their mid-thirties considering emigrating to the US, put their tax queries to Marilyn McKeever, partner in BDB Pitmans’ private wealth team. She states:
Once you and your wife are non-UK resident you will not be subject to UK income tax on most UK income (except tax on work done in the UK and UK rental income). Once resident in the US, you will be subject to US federal and state taxes. If you are subject to tax in both countries, the Double Tax Treaty will allocate taxing rights or provide for a credit of one country’s tax against the other’s, so you will not be taxed twice. The treaty does not cover state taxes. If you and your wife relocate part way through the tax year, you are UK resident and taxable for the whole year, even after you leave. In specific circumstances you can ‘split’ the year so that you are treated as non-resident, broadly, from when you leave. If you return to the UK having been non-resident for five or fewer tax years, you may be taxable in the UK on your return, on certain gains made or income received while abroad.
The full article is available to subscribers of the Financial Times, here.