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I am a United States Citizen assessing job opportunities in the United Kingdom. I do not full understand the conversion, tax rates, cost of living, etc. when looking at jobs, I could use some help.
I currently make $65,000 in the United States, and have been looking at jobs that pay about 40,000 pounds in Scotland and the United Kingdom. Obviously I will still have bills like student loans to pay in the US, but I am curious what I would take home after taxes in the UK? I am new to this, so any advice would help.
Is insurance included, childcare, etc.? What taxes are different in UK that I do not see in US? Just an idea of what my paycheck would look like, and what the cost of bills I would still need to cover would be? Having a 65k US salary, is this a bad idea accepting 40k pounds in the UK? Or will life be improved? I have a child so need to make a smart decision.
See Income tax calculator: Find out your take-home pay
As you can see take-home pay will be about £30,000 pa for £40,000 pa gross. The £3,800 pa national insurance deduction is your contribution to the UK state pension scheme so it's not really a tax. When you are 65 it starts paying out regardless of where you live in the world. You and your family will be able to make use of the NHS at no additional cost so you don't need any health insurance. So whatever your premiums are now that will be zero in the UK - probably a considerable saving.
Do be aware that work visas are temporary: typically 2 to 5 years duration. After 5 years you may or may not have the opportunity to acquire a permanent residents' visa - if you want one.
To compare US vs UK pay you have to consider the whole package.
In general the US gives higher basic pay and less tax.
The UK gives lower basic and higher tax with the trade off of more paid holiday, sick leave, free health care etc.
Food/stuff prices are usually higher in the UK but as with the US it's heavily dependant on area, in Scotland for example you could be living in a big house with a few acres of land in the Highlands, or a flat in central Edinburgh for the same price.
How old is the kid? Child care can be really expensive until late their old enough for state school.
Re taxes, be aware that, as a US citizen, you still must file a US IRS tax return. There are some "foreign income" exclusions, but you need to know what's expected of you when filing. Some reading at these links will get you started. And you will probably need to use a tax preparer in the UK who is knowledgeable on filing US returns.
I am a United States Citizen assessing job opportunities in the United Kingdom. I do not full understand the conversion, tax rates, cost of living, etc. when looking at jobs, I could use some help.
I currently make $65,000 in the United States, and have been looking at jobs that pay about 40,000 pounds in Scotland and the United Kingdom. Obviously I will still have bills like student loans to pay in the US, but I am curious what I would take home after taxes in the UK? I am new to this, so any advice would help.
Is insurance included, childcare, etc.? What taxes are different in UK that I do not see in US? Just an idea of what my paycheck would look like, and what the cost of bills I would still need to cover would be? Having a 65k US salary, is this a bad idea accepting 40k pounds in the UK? Or will life be improved? I have a child so need to make a smart decision.
Thanks,
Richard
You will take home in and around £25,000. The population don't have as much Disposable Income as Americans as our taxes are significantly higher.
NB: if you earn over £45,000 you will go into a higher tax bracket and lose even more money (40%),so you have got to evaluate whether that extra £5,000 is worth it.
My son is 5 months old. The job says it offers "child care vouchers", but I am not sure what that means or involves.
In the United States I am interviewing for positions that are $80k or more, so I want to make sure I'm not leaving too much on the table by taking a job overseas that is 40k euro annually.
You won't need health insurance, it is covered by national insurance which is taken straight out of your paycheck. You may be able to pay extra for private healthcare through your job, if you aren't happy with what you get from the NHS.
"childcare vouchers" could mean anything.
Although you still have to file a US tax return every year, you probably won't have to pay anything for your salary since the UK tax rate is higher.
In general, houses are smaller and more expensive, but everywhere is nearer.
You won't need health insurance, it is covered by national insurance which is taken straight out of your paycheck. You may be able to pay extra for private healthcare through your job, if you aren't happy with what you get from the NHS.
"childcare vouchers" could mean anything.
Although you still have to file a US tax return every year, you probably won't have to pay anything for your salary since the UK tax rate is higher.
In general, houses are smaller and more expensive, but everywhere is nearer.
Important tax note. You will have to pay US taxes on profits from sale of a private residence, even if it's your primary residence. The UK tax exempts sales of primary residence, but not the US. Just ask Boris Johnson.
It's actually a good illustration of how US taxes work abroad. You pay US taxes solely because the UK tax on profit of sale of your primary residence is lower than US taxes (exempt meaning 0%).
It gets worse: suppose you buy a house for £300,000 and sell a few years later for £330,000. Your capital gain is £30,000 so that's what the US taxes you on - right? Wrong! Suppose at the time of purchase £1.00=$1.25 and at the time of sale £1.00=$1.95. As far as the IRS is concerned, you bought at $375,000 and sold for $643,500 so your capital gain is $268,500 not the $58,500 you thought it was. The gain may be mostly imaginary but they don't care.
It gets worse: suppose you buy a house for £300,000 and sell a few years later for £330,000. Your capital gain is £30,000 so that's what the US taxes you on - right? Wrong! Suppose at the time of purchase £1.00=$1.25 and at the time of sale £1.00=$1.95. As far as the IRS is concerned, you bought at $375,000 and sold for $643,500 so your capital gain is $268,500 not the $58,500 you thought it was. The gain may be mostly imaginary but they don't care.
Yup, the exchange rates at the time of purchase and sale are taken into account, and, even if the sale were for a Sterling loss, you may find you owe taxes on the dollar profit (but that equally applies to any sale leading to taxable income).
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