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Megan C
Megan C, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 16576
Experience:  Licensed CPA, CFE, CMA, CGMA who teaches accounting courses at Master's Level
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I contract with a UK company, but I am an American, resident

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I contract with a UK company, but I am an American, resident in the US, and do all of my work in the US. I have been offered an Enterprise Management Incentive stock option. Am I subject to any income taxes or National Insurance taxes in the UK on the issuance, exercise, or later sale of shares from this option? Is the UK company subject to any income taxes or National Insurance taxes on the issuance, exercise or later sale of shares from this option?
Thanks for asking your question! I'm sorry to hear about your tax issue and I'm going to try my best to help you understand or resolve it.

Great question - you're not going to owe UK tax on these options, as you are an American, and you reside in the US. You can expect to be protected from the UK Tax Act under article 13 of the US-UK tax treaty, which is available HERE.

Since you are talking about options, I will point out that you could be exposed to UK tax if you were a UK resident at the time the options are granted, so if you're toying with the idea of moving to the UK, do so after you get the options. There are some examples to read about this topic, HERE.

As for the UK company - they aren't subjecting themselves to US taxes by doing business with you. You are an American doing work in America, therefore you aren't becoming entitled to UK benefits.

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Customer: replied 4 years ago.
is the UK company subject to any UK taxes or National health taxes as a result of this transaction?
No, as you are not an employee - you're a contractor. Further, you work and live in the US therefore are not entitled to any public UK benefits.

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