Do I still pay UK tax?

When you move to the US you usually stop being UK resident for tax and become a US tax resident instead. The US then taxes your income from everywhere, including the UK, so getting both sides right matters from your first year.

Tell HMRC you’re going

Are you still UK resident?

The Statutory Residence Test decides your UK tax residence for each UK tax year. In short, GOV.UK says:

• You’re usually non-resident if you spend fewer than 16 days in the UK (46 if you weren’t UK resident in any of the previous 3 tax years)
• You’re also usually non-resident if you work full time abroad (averaging at least 35 hours a week) and spend fewer than 91 days in the UK, of which no more than 30 are working days
• You’re resident if you spend 183 days or more in the UK in the tax year
• Otherwise your UK ties, such as family, a home and work here, are weighed against your days

Long Christmas and summer trips home in your first year can keep you UK resident. Count your days.

Split-year treatment

When you move part-way through a UK tax year, the year is usually split into a resident part and a non-resident part, so you only pay UK tax on foreign income, such as your US salary, for the time you lived here. You won’t get it if you live abroad for less than a full tax year before coming back, and other conditions apply.

When the US starts taxing you

The US taxes its tax residents on worldwide income. As a non-citizen you become a “resident alien” for tax in one of two ways:

Days on an F or J visa as a student, teacher or trainee usually don’t count, for a set period, if you file Form 8843. Most people on H-1B, L-1 and E-2 visas pass the substantial presence test in their first year.

Your first US tax return

• In the year you arrive you are usually “dual status”: non-resident before you arrived and resident after. Dual-status filers can’t use the standard deduction or file jointly
• If your spouse is a US citizen or resident, a non-resident can choose to be treated as resident for the whole year and file jointly. It can lower the bill, but it brings the whole year’s worldwide income into US tax. Get advice before choosing
• You pay federal income tax, plus state income tax in most states and city tax in a few. Social Security and Medicare tax (FICA) comes off your pay too
• See Social Security number and US tax for how payroll and the W-4 form work

The UK–US tax treaty

The UK and the US have a double taxation treaty, in force since 31 March 2003, so you can usually claim credit for UK tax against US tax on the same income. Most treaties, including this one, have a “saving clause” that lets the US tax its residents as if the treaty didn’t exist, with set exceptions. IRS Publication 519 explains when you must disclose a treaty position on Form 8833.

ISAs and UK funds

You can keep your ISA and it stays tax-free in the UK, but you can’t pay any more in once you are not UK resident. Tell your provider as soon as you leave.

The US doesn’t recognise ISAs: for a US tax resident, interest, dividends and gains inside one are taxable. UK funds, inside or outside an ISA, can count as “PFICs” (passive foreign investment companies), which have harsh US tax rules and a yearly Form 8621. Get cross-border advice before you move. See Moving money from the UK.

Reporting UK accounts

• FBAR: if your non-US accounts add up to more than $10,000 at any time in the year, you file FinCEN Form 114 online. It is due 15 April, with an automatic extension to 15 October
• Form 8938 (FATCA): filed with your tax return if you live in the US and your foreign financial assets are over $50,000 on the last day of the year or $75,000 at any time (double for married couples filing jointly)
• Penalties for not filing Form 8938 start at up to $10,000, even when no tax is due

What else to tell

• The Student Loans Company, if you are leaving for more than 3 months. You keep repaying based on your overseas income unless you show it is below the threshold. If you don’t tell them, you could build up arrears
• The Child Benefit Office, if you go abroad for more than 8 weeks. The US isn’t on GOV.UK’s list of countries where Child Benefit can continue
• Your bank, pension providers and investment platforms, with your new address