Firstly I’m not a lawyer or accountant but I have contracted remotely. I’m a designer not a teacher but I’d expect the tax regulations to be the same for any business.
Working for a foreign country as a contracted employee based in the UK carries a lot of different rules and tax implications compared to contracting for a UK organisation. To make this even more complex different countries have different agreements with the UK regarding how tax is applied.
The US department of tax will also be involved in some capacity since it’s a US company paying someone. As I understand it, the way it works with some countries, you get a certificate from the country where the company is based saying you’re not resident in that country and therefore should not pay tax, that then goes to HMRC and you get taxed by them. Some countries also hold a percentage also, so you may end up paying a fee/tax in the company country also.
This might not apply to the US.
Also it’s worth noting IR35 which I’m not sure if it applies to foreign contracting. It’s a complex ruling but it was brought in so any contractor who is basically an employee in everything but title, has to be taxed in the same way as an employee, and usually this needs to be done through an umbrella company.
Again though that might only be UK contracts.
I’d guess it would need to be done under a limited company, so that would need to be set up. Ltd companies are treated the same regardless of size so there are a lot of documents etc that need to be filed. Accounts should also be run well and kept up to date.
Long story short, get a good accountant and explore every aspect of it. It’s not the most complex thing in the world but it also isn’t as easy as just being an employee.
Bear in mind from my experience some small time local style accountants will have not had experience working with foreign contracts/trade. I’d advise finding one who is well versed in doing so.
I’d highly recommend not trying to do accounts, it gets very complex and you can get fined for mistakes.
Also, and this may not be relevant, but if you’ve got any big life purchases coming up, mortgage amends etc then typically you’ll need two years of accounts before they’ll factor it as income. This isn’t exclusively true but it can be tricky to secure financing as a contractor without extensive accounts.
One more thing, you don’t get sick pay or holiday pay. This makes it easy to get to a holiday and think ‘this is costing me X in lost earnings per day’. This is why on the face of it contracting can seem very lucrative but when you factor holiday, sick pay and things like pension contributions, it becomes more balanced.
Sorry to sound so negative, it’s just not straightforward and whilst it gets easier, it can be overwhelming initially.
