NI/Tax question

[Usui Takumi 1,562]

I'm not finding the answer really on HMRC and I thought maybe someone here might be able to help.

My wife currently works for her UK employer and has been over here for nearly a year. She plans on continuing to work them (she does only internal UK work...nothing US related). While I know I can file for a tax credit next year I know I'm going to get whacked by California (effectively double taxed) Therefore we've been looking to see if she can be changed to a UK non resident to save some money. I would assume this would absolve her from having to pay NI contributions at the minimum and even perhaps lower her UK taxes slightly?

Everything i've found about the subject seems to be related on how to KEEP making NI contributions. Can some one point me in the right direction?

Edited September 16, 2009 by lancer1655

[Usui Takumi 1,562]

I'm not finding the answer really on HMRC and I thought maybe someone here might be able to help.

My wife currently works for her UK employer and has been over here for nearly a year. She plans on continuing to work them (she does only internal UK work...nothing US related). While I know I can file for a tax credit next year I know I'm going to get whacked by California (effectively double taxed) Therefore we've been looking to see if she can be changed to a UK non resident to save some money. I would assume this would absolve her from having to pay NI contributions at the minimum and even perhaps lower her UK taxes slightly?

Everything i've found about the subject seems to be related on how to KEEP making NI contributions. Can some one point me in the right direction?

Does the P85 still apply in this situation btw? I'm guessing when I left in 2007 I should have submitted the non UKC version? Should I still send mine in too?

[Trompe le Monde 1,107]

I would simply call the Inland Revenue - I've actually found them surprisingly very helpful when dealing with UK tax matters.

I am currently having a fight with the Franchise Tax Board over my 2005 taxes when I was resident of the UK for nearly 10 months.....they claim I should be taxed at the rate for my worldwide income for that year not what I earned in CA, even though it would result in me paying MORE TAXES than a full year resident. A little bit different situation than yours, but very frustrating. I've taken it as far as an appeal hearing - if CA are considering your worldwide income for tax purposes, they need also consider the tax you have already paid on that income.

[Usui Takumi 1,562]

I came across that last year. The way I understand it is that you are taxed on the income earned for those 2 months but your rate is determined by your full year income.

[Trompe le Monde 1,107]

That's correct....with no consideration for taxes that have already been paid, or the relative strength of the currency you earned your wages in

CA Franchise Tax Board will squeeze for every last cent

[Usui Takumi 1,562]

What do you mean regarding the currency? I found you simply take the year's average exchange rate?