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Young man based in UK working for a US company

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Hope someone can help

I have a young gentleman who lives and works from home in the UK and has just started working for an American games company.


They have asked that he be self employed and bill them the hours he works.  They then pay him in US$ which is then converted into GBP when paid into his paypal account.  As far as I know they are not deducting any US tax.


My questions are - if anyone can help:

Is he ok to register as self employed with just that one client?

Is this considered Foreign income and treated differently on the self assesment?

Does he record the converted sterling amount on that given day as the income or should he be using some other exchange rate?


I have read that paypal exchange rates are very poor - so perhaps change this to another method of receipt


Many thanks


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Hi Woody, my feeling is that if he’s self-employed then its irrelevant where the earnings are derived from as he is (presumably?) a British domicile and is living and earning his income in the UK this is solely subjected to UK taxes. Whilst payment is sourced from the US if its earned in the UK i.e. he’s not physically sited in the USA whilst being paid from there, then they have no taxing rights over this income.

Re registering as self-employed – there is no minimum number of engagements required, if he was to operate through a Limited Co he would have IR35 issues where the bulk or all of his earnings were sourced from a single payer (this recently changed to shift the emphasis onto the payer, but is a moot point if he’s registered as a sole trader).

Finally the cleanest way to record the income in sterling is to apply the conversion rate using a well known Fx site like Oanda or HMRC provide Fx rates.

Edited at 18 May 2021 10:27 AM GMT

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