Moving to the US from the UK: The 2026 Tax Guide

Yes, once you become a US tax resident you pay US tax on your worldwide income, and for most people moving from the UK that is a bigger change than the move itself. Unlike the UK, which taxes you based on residence (and, for arrivals, potentially the new 4-year foreign income and gains regime), the United States taxes both its residents and its citizens on income arising anywhere in the world. From the point you become a US resident, your UK employment income, self-employment profits, dividends, interest, rental income, and capital gains are all reportable on a US federal return.

This does not usually mean paying full tax twice. The US operates a foreign tax credit system, and the UK-US double taxation treaty allocates taxing rights and provides relief so that, in most cases, you pay the higher of the two countries' rates rather than both stacked on top of each other. The treaty also contains a controversial saving clause that lets the US continue to tax its citizens and residents largely as if the treaty did not exist, which is why the interaction is technical rather than automatic. We cover the treaty in detail in our us-uk-tax-treaty-explained guide, and the practical filing burden of being a US person in our us-uk-tax-guide.

A crucial point that trips people up: your visa category does not decide your tax residence. An E-2 investor visa, an L-1 intra-company transfer, an O-1 for extraordinary ability, or an EB-5 immigrant investor visa all give you the legal right to live and work in the US, but none of them by itself makes you a US tax resident. Tax residence is set by two separate objective tests, described in the next section.

You become a US resident for tax purposes if you meet either the green card test or the substantial presence test in a calendar year. Meeting either one is enough, and from that point your worldwide income is within the US system.

The green card test is the simpler of the two. If you are a lawful permanent resident of the US at any time during the calendar year, meaning US Citizenship and Immigration Services has issued you a Permanent Resident Card (Form I-551), you are a US tax resident. This applies whether or not you spend much time physically in the country.

The substantial presence test is a day-counting test. You meet it if you are physically present in the US on at least 31 days in the current year and 183 days across a three-year weighted window. The weighting is: all of your days in the current year, plus one-third of your days in the first preceding year, plus one-sixth of your days in the second preceding year. Because of the weighting, a full-time move part-way through the year can still meet the test in year one, or push you over the line in year two.

There are reliefs. If you are present for fewer than 183 actual days in the current year, keep a tax home abroad, and have a closer connection to another country, you may claim the closer connection exception by filing Form 8840. The treaty tie-breaker rules can also allocate residence to one country where both would otherwise claim you. These are useful in a transition year but need to be claimed correctly and on time.

The US tax year is the calendar year, 1 January to 31 December, unlike the UK's 6 April to 5 April year. Your first year is normally a dual-status year: you are a non-resident for the part of the year before your residence starting date and a resident afterwards. During the non-resident part you are taxed only on US-source income; during the resident part you are taxed on worldwide income. Dual-status returns have their own rules, generally cannot be e-filed, and are usually due by 15 April of the following year (with an automatic extension available for those living abroad).

US income tax comes in two layers, and where you live decides the second one. Federal income tax applies wherever you are in the country, using progressive brackets up to 37 percent. On top of that, most states levy their own income tax, and the state you choose can change your total bill by tens of thousands of dollars a year.

The contrast is stark. Several states levy no personal income tax at all, including Florida, Texas, Nevada, Washington, Tennessee, Wyoming, South Dakota, and Alaska. At the other end, California's top rate exceeds 13 percent and New York State (plus New York City's own local income tax) sits among the highest combined burdens in the country. Two people with identical federal returns can pay very different totals purely on where they settle.

• State residence has its own rules, separate from federal residence, and high-tax states like California and New York apply aggressive residency and domicile tests to stop people leaving on paper only.
• No-income-tax states usually recover revenue elsewhere, through higher property taxes (Texas) or sales taxes, so compare the whole picture, not just the income-tax headline.
• Some states do not conform to federal treaty relief, meaning a state may tax income the treaty exempts at federal level. This is a common and expensive surprise.
• City-level taxes exist in places like New York City, so the state figure is not always the full local burden.

For a UK family weighing a move, the state choice often matters more to the annual cost of living than the federal rules do, so it belongs in the decision from the start, not as an afterthought once the visa is sorted.

As soon as you are a US person, your UK accounts become reportable to the US, and there are two separate regimes to satisfy. This is an information-reporting obligation, not usually a tax charge, but the penalties for missing it are severe, so treat it as non-negotiable.

The FBAR (Foreign Bank Account Report, FinCEN Form 114) is required if the total value of all your non-US financial accounts exceeds $10,000 at any point in the calendar year. That threshold is an aggregate across every account, so a current account, an ISA, a savings pot, and a pension can combine to cross it easily. It is filed electronically with FinCEN, separately from your tax return, and the deadline follows the tax return with an automatic extension to 15 October.

FATCA reporting on Form 8938 is filed with your income tax return and kicks in at higher thresholds. For someone living inside the US, the threshold is $50,000 of specified foreign financial assets at year end (or $75,000 at any time) if single, doubling to $100,000 at year end (or $150,000 at any time) for a joint return. If you are still living abroad, the thresholds are considerably higher. Many people who move from the UK end up filing both forms, because they overlap but are not identical in what they cover.

Two UK products deserve particular care. UK ISAs get no special US treatment, so their income and gains are fully US-taxable despite being tax-free in Britain. And UK collective investments (unit trusts, OEICs, most ETFs) are typically treated as PFICs (Passive Foreign Investment Companies) under punitive US rules that can make holding them very costly. Our fbar-and-fatca-explained guide walks through the mechanics, and reviewing your UK portfolio before you become a US resident is one of the highest-value pieces of pre-move planning.

To stop being taxed by the UK on your worldwide income, you need to become non-UK resident under the Statutory Residence Test (SRT), and to do it cleanly you want split-year treatment for the year you leave. The SRT is a mechanical set of tests based on days spent in the UK and your ties to the country (family, accommodation, work, and prior presence). Broadly, the more UK ties you keep, the fewer days you can spend here before residence is triggered.

Split-year treatment lets a single UK tax year be divided into a UK-resident part and an overseas part, so that after your departure date your foreign income and gains fall outside the UK net rather than being taxed for the whole year. It applies only if you meet one of the specific statutory cases (for example, starting full-time work overseas or ceasing to have a UK home). It is not automatic and it is not a choice you simply tick; you must genuinely fit a case.

The biggest trap is temporary non-residence. If you have been UK resident in at least four of the seven tax years before you leave, and you return to the UK within roughly five years, certain income and gains realised while you were away can be dragged back into UK tax in the year you return. This particularly affects large dividends, pension lump sums, and capital gains crystallised during a short spell abroad, so if there is any chance you will come back, the length of your absence needs planning, not guessing.

Note too that the UK abolished the non-dom remittance basis from 6 April 2025 and moved to a residence-based system, including for inheritance tax (broadly, you are within its scope once you have been UK resident for 10 of the last 20 tax years). That change mostly affects people arriving in or staying in the UK rather than leaving, but it matters if you later return: the new 4-year foreign income and gains regime is available only to those who have been non-UK resident for at least the prior 10 consecutive tax years. Our leaving-the-uk-tax-guide covers the departure mechanics in full.

Keeping a UK home or pension after you move is common and workable, but each brings ongoing UK obligations that continue after you have left. Deal with them deliberately rather than letting them run on autopilot.

If you let a UK property while non-resident, you fall within the Non-Resident Landlord (NRL) scheme. Your letting agent or tenant may be required to withhold basic-rate tax from your rent unless you register with HMRC to receive it gross and then report the income through Self Assessment. The rental profit stays UK-taxable because it arises from UK land, and it is also reportable on your US return, with treaty and foreign tax credit relief coordinating the two.

When you sell UK residential property as a non-resident, you must file a Non-Resident Capital Gains Tax (NRCGT) return and pay any tax within 60 days of completion, even if there is no gain or you make a loss. The US will also look at the gain, using its own cost basis and rules, with foreign tax credits available for the UK CGT paid. If you sell US real property as a non-US person, the mirror-image rule applies: FIRPTA generally requires the buyer to withhold 15 percent of the sale price and remit it to the IRS, refundable through your US return if it exceeds the actual tax. There are exceptions, including where the buyer will use it as a residence and the price is $300,000 or less.

UK pensions generally travel well. The UK-US treaty specifically addresses cross-border pensions, and a UK pension is typically recognised so that growth inside the fund is not taxed year to year and distributions are taxed in a coordinated way. US retirement accounts work the other way: 401(k) plans and IRAs, including Roth IRAs, are covered by the treaty, and qualified Roth distributions that are tax-free in the US have a strong treaty basis for being tax-free in the UK too. One area to watch is lump sums: HMRC updated its guidance in March 2025 on the treatment of lump-sum distributions from certain US pension plans, and its stance on how the saving clause interacts here is contested, so the treatment of a specific lump sum is best confirmed for your facts (to confirm).

Finally, if your move involves running a business through a US LLC, get advice before you set it up. HMRC's default position after the Anson litigation is to treat a US LLC as opaque, while the US treats a single-member LLC as transparent. That mismatch can break double-tax relief and, in HMRC's own illustration, leave a UK-resident member facing an effective tax rate in excess of 75 percent. The UK government opened a consultation in June 2026 (closing 31 July 2026) on reforming the treatment of UK-resident individual members of US LLCs and similar reverse hybrids, proposing to let eligible members treat their holding as transparent, so the position is in flux (to confirm final rules). Our us-llc-uk-resident-tax guide covers the pitfalls in depth.