British Citizens Moving to the United States and paying US & UK Tax

Moving from the UK to the USA

British Citizens Moving to the United States: Managing US and UK Tax

Moving to the United States is exciting, but the tax side catches many British movers out. You can find yourself filing in both countries, facing federal, state and even city tax, and worrying about being taxed twice on the same income. With planning before you go, most of that is manageable.

Book a non-obligation call

What to know before you move

  • ✓ Once you are a US tax person you file a federal return (Form 1040) each year, even on worldwide income.
  • ✓ States such as California and New York add their own tax, and some cities, like New York City, tax on top.
  • ✓ You may still have UK obligations if you keep UK income or assets.
  • ✓ The US-UK treaty and foreign tax credits exist to stop the same income being taxed twice.
  • ✓ If you own a UK limited company, Form 5471 (and sometimes 5472) can apply once you are a US person.
  • ✓ Planning before you move is where the real savings are.

The US and UK tax landscape

As a British citizen moving to the United States you can face tax in both countries. On the US side you file a federal return with the IRS each year, including on worldwide income. If you live or work in California or New York you also file a California or New York state return, and some cities, such as New York City, levy their own tax on top. It adds up quickly, which is why the order in which you plan your move matters.

Two illustrative scenarios

Illustrative only. These figures apply top marginal rates for simplicity. They are not effective tax rates, and they ignore the US standard deduction, personal allowances, the US-UK treaty, the Foreign Earned Income Exclusion and foreign tax credits, which usually reduce the bill. The self-employed also pay US self-employment tax, which adds cost. Your actual liability will differ, so treat these as a rough sense of scale, not a quote.
Scenario Income Federal (illustrative) State City Illustrative total
London to California, employed $100,000 up to ~$24,000 (24% band) CA up to ~9.3% (~$9,300) none ~$33,300 before reliefs
Manchester to New York, self-employed $150,000 up to ~$36,000 (24% band) NY ~6.85% (~$10,275) NYC up to 3.876% (~$5,814) ~$52,000+ before reliefs, plus self-employment tax

The takeaway is not the exact figure, which planning and treaty relief will change, but that several layers of tax can stack up, and that the right structure and claims can bring the real bill down.

Your dual responsibilities

Living in the US does not always end your UK obligations. You may still need to file a UK return if you have UK income or income-generating assets, and the same income could be taxed in both places unless you claim relief under the US-UK double taxation agreement. The UK basic rate is 20% for most people, so holding UK earnings while living in the US can create a genuinely complex position that needs coordinating across both systems.

The risk of not filing

Missing these obligations can mean penalties and interest. Many people assume they can forget about tax in their home country, and that assumption causes the biggest problems later. Once you are a US tax person you will usually file a 1040 with the IRS, and you will need an ITIN (via Form W-7) if you are not eligible for a Social Security Number. If you own a UK limited company you may have to file Form 5471, and where a company is engaged in a US trade or business, Form 5472 can also apply.