There are a plethora of differences between the tax systems in the UK and US, and more changes are planned. Here are five for you to bear in mind:

  1. Corporation tax

For a long time, it’s been the case that US companies paid more corporate tax than those in the UK, with US companies paying 35% while UK ones pay around 20%, a significant difference. However, this is set to change with President Trump unveiling his plans to slash US corporation tax to 15%, so listen and wait to see how things develop.

  1. Income tax

You’ll find a marked difference in the income tax individuals pay. US citizens living abroad are liable to pay tax on their global income – even if they are not based in the US. However, UK nationals living outside of the UK may only be liable to pay tax on income earned within the UK, though you’ll have to pay close attention to the residency rules.

  1. Tax allowances

On the whole, you’ll benefit from more tax allowances in the US than you would in the UK. In the US for example, each child you have will lead to a substantial reduction in your taxable income. In the UK, you may be eligible for working tax or child tax credit.     

  1. VAT matters

VAT is another differential in tax between the UK and US, so if you’re considering importing or exporting goods, you’ll need to keep abreast of the situation. On the whole, goods exported from the UK to the US don’t need to have VAT added, though you will need to report the sales on your VAT return. However, if you’re providing services, VAT may be chargeable. Import goods from the US and you’ll be charged a state sales tax. Shop in the US, and you’ll be charged a sales tax in addition to the advertised cost of the product you’re buying.

  1. Property versus council tax
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In the US you’ll pay property tax, as opposed to council tax in the UK. However, property tax tends to be substantially higher.

Your tax affairs

The differences between the US and UK tax systems are many and numerous; the information above is merely an overview and introduction; the situation is complex, so do seek professional advice.

A key difference is that US citizens pay a complex combination of federal, state and local tax rates, which we do not in the UK.

The Trump administration

However, a second factor is the Trump administration, as back in April President Trump announced wide spread changes to the US tax system. These changes are still being developed. So, the evolving tax situation makes it all the more important to seek expert tax advice if you’re thinking of moving or doing business in the US.

Chartered accountants at your service 

Your tax responsibilities will differ depending on your specific circumstances, so it’s always best to seek professional clarification. Tax advisors Frank Hirth have extensive knowledge and experience of the US and UK tax systems. So if you’re unsure of your tax liabilities in either country they can help you by providing advice, accounting services, tax reporting and compliancy services, so you’ll know you’re on the right track.

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