If you get the dream job in Hollywood then please don’t just go and live the high life without speaking to us first. It is essential to consider the tax implications of your move before you go and you could save money in the long term.
In the United States, income tax is deducted at source from all performers and unless arrangements are made in advance, there is a flat rate deduction of 30% and no allowance for expenses. However, it is possible to register with the American Tax Authority (IRS) and obtain a Social Security Number to enable a reduced rate of withholding. Even then it is most likely that the amount of tax deducted which is both Federal Tax and State Tax will be more than you should ultimately pay. Therefore, it is usual for British performers working in the USA to file a tax return there and claim a refund of the overpaid Federal and State Tax.
However, that is not the end of the matter. British entertainers are also taxed in the UK on their worldwide income, so the same income and expenses must be included in the UK tax return. To ensure you do not pay twice, the US tax that has already been paid goes as a credit against the UK tax liability on the same income. As US tax rates are currently lower than UK tax rates, there may still be more UK tax to pay on the same income, but no more than you would pay if you had done the work in the United Kingdom.
Social Security rules are also different in the United States but it is possible to apply to pay these at a reduced rate if you can show that you are already paying National Insurance in this country. This is done by obtaining a Certificate of Continuing Liability from the National Insurance Contributions Agency. These will be given to a performer as long as they are paying the flat rate self-employed contributions and have been doing so for the three months before the application for the certificate.
The application for the certificate must be accompanied by a copy of the contract and there are often considerable delays in getting these certificates, so the sooner the application is submitted, the better.
For further advice on your specific circumstances when working in the United States please contact a member of our team or email your enquiry to us.
We also work with appropriately experienced associate firms in New York and Los Angeles who can help make sure that your US tax is properly dealt with both in the United States and in the UK.