A separate agreement, called the Totalization Agreement, allows U.S. expats in the U.K. not to pay social security taxes to U.S. and U.K. governments. Instead, contributions to the UK can be credited to one of the two systems. The country they pay depends on the length of their life in the UK. When two countries try to tax the same income, there are a number of mechanisms to provide tax relief so that you do not pay twice taxes. The first is whether the double taxation convention between the United Kingdom and the other country limits the right of either country to tax these revenues.
You cannot claim this facility if the UK Double Taxation Convention requires you to collect taxes from the country from which your income comes. As a general rule, they still receive relief, even if there is no agreement, unless the foreign tax does not correspond to UK income tax or capital gains tax. The United Kingdom has concluded a series of bilateral tax cooperation agreements through the exchange of information. There is a list of current double taxation agreements on GOV.UK. As a general rule, expatriates are required to participate in the UK`s National Insurance after taking a job (including self-employment). This covers the costs of social assistance, health insurance, retirement plans, unemployment insurance and workers` compensation, as well as other social programmes in the UK. There is an agreement between the United States and the United Kingdom on social security. This agreement requires people to pay social security taxes in the country where they work. But if you are sent by your employer to the UK for 5 years or less, you will continue to be covered by the US social security system via your US taxes abroad, with an exemption from coverage by the UK program.
For the self-employed, they pay in the country where they reside. HMRC has reached an agreement with the Swiss tax authorities. The agreement allows for close cooperation between the UK and Switzerland, and there is an important exchange of information between the two countries. The agreement provides for a historic tax on Swiss funds held by residents in the UK, up to 34% of the balance in an account as of 31 December 2010 or 31 December 2012. UK residents with Swiss accounts may also be subject to a WHT of up to 48% on their accounts. With regard to inheritance tax, Swiss payers are required to withhold 40% tax or to file a declaration if a person dies, as well as other measures. In another scenario, a double taxation agreement may provide that non-exempt income is calculated at a reduced rate. For more information, see HMRC HS304`s “Non-Residents – Discharge under Double Taxation Agreements” on the GOV.UK. Certain types of British visitors are subject to special treatment under a double taxation agreement, such as students, teachers or overseas government officials.