The Cross-Border Tax Guide to Taking a London Job Package
The cross-border tax implications of a London job package mean one salary is subject to two systems at once. As a US citizen moving to Britain, you stay within the US worldwide filing net when entering UK residence, so every element of the offer — base, bonus, equity, allowances, and pension — has to be mapped against both rulebooks before you sign anything.
Why is the cross-border tax different when taking a London job package
Most UK hires read an offer letter, check the net-pay calculator, and accept. A US citizen or green-card holder cannot. The United States taxes its citizens on worldwide income, no matter where they live, so accepting a role in Canary Wharf does not switch off your Form 1040. At the same time, working days performed in Britain pull you into UK residence and Pay As You Earn. The cross-border tax on a London job package is therefore the discipline of reading a single compensation offer through two lenses simultaneously, then using the reliefs and the treaty to ensure the same pound is not taxed twice.
The stakes are real money. A poorly structured relocation bonus, a stock grant sourced to the wrong country, or a housing allowance dropped into the wrong exclusion can cost five figures over a three-year assignment. Our wider primer on US expat tax in London sets the scene; this guide focuses specifically on the offer document itself.
Step one: where do you become a UK tax resident?
Your UK exposure is decided by the Statutory Residence Test (SRT), a day-counting framework that weighs days present against "ties" such as family, accommodation and prior residence. In the tax year, when they move to London for a full-time job, most people become UK residents.
The good news is split-year treatment. Where you arrive part-way through the UK tax year (6 April to 5 April), the year can be split so that only the UK portion is taxed as a resident. One of the most important steps in the procedure is to record your arrival date accurately and your first working day, as this marks the transition from your previous US-only life to your new dual-reporting life
Step two: the FIG regime — your four-year window
From 6 April 2025, the remittance basis was abolished and replaced by the 4-year Foreign Income and Gains (FIG) regime. If you have been a non-UK resident for at least 10 consecutive tax years, you can claim 100% relief on qualifying foreign income and gains for your first 4 years of UK residence — and, unlike the old rules, you can bring that money into the UK without a tax charge.
For an incoming American, this is genuinely valuable. US-source investment income, gains on a US brokerage account, and rental income on a home you kept in the States can fall outside UK tax during the window. It does nothing for your UK employment income — your London salary is UK-taxed from day one — but it shelters the rest of your financial life while you settle. We unpack the mechanics and the claim process in our dedicated UK FIG regime guide.
Step three: the US side keeps running
Nothing about a move to London pauses your US return. You will still file Form 1040 to report worldwide income, and you will avoid double taxation using one or both of the two tools.
The Foreign Earned Income Exclusion (FEIE) under §911 lets a qualifying individual exclude up to $132,900 of foreign earned income for 2026, plus a foreign housing amount (the base housing limitation is $39,870 for 2026). To qualify, you must meet either the bona fide residence test or the 330-day physical presence test, provided that your tax home is in the UK.
The alternative — and usually the stronger choice on a well-paid London package — is the Foreign Tax Credit on Form 1116. Because UK income tax rates are well above US rates at higher salaries, the credit often wipes out your US liability entirely. It can carry forward credits for the future. Choosing between them is rarely obvious; our comparison of FEIE versus the Foreign Tax Credit walks through the trade-offs, including the trap that electing FEIE can strand you in a lower credit basket.
Step four: Social Security and the totalization agreement
Here is a rare piece of good news built straight into the cross-border tax, taking a London job package. Under the 1985 US-UK Totalization Agreement, you pay into only one social security system, not both. As someone physically working in the UK on a local London contract, you pay UK employee National Insurance Contributions (NIC) and are exempt from US Social Security and Medicare (FICA).
If, instead, a US employer seconds you to London for under five years, the detached-worker rule can keep you in US Social Security — in which case the employer applies for a certificate of coverage. Hence, the UK exempts you from NIC. In any case, you avoid paying twice, but the exemption is not automatic; someone must hold the certificate; our US-UK totalisation explainer explains who files what.
Reading each element of the offer
A modern London package is rarely just salary. Each line has its own cross-border character, and the cross-border tax implications of taking a London job package are detailed below.
Base salary
Taxed through UK PAYE from your first working day, and reportable on your US return (relieved by FEIE or the Foreign Tax Credit). Straightforward — but it anchors everything else.
Signing and relocation bonuses
A signing bonus is fully taxable in both countries. Relocation support is more forgiving on the UK side: HMRC exempts up to £8,000 of qualifying relocation costs — legal fees, removal, temporary accommodation and travel — provided you change your main residence for the job. Anything above £8,000 is a taxable benefit. The US gives no equivalent exclusion, so employer-paid relocation is generally US-taxable; the Foreign Tax Credit is usually what rescues it.
Housing and cost-of-living allowances
London allowances are UK employment income. On the US side, part of the cost may be sheltered by the foreign housing exclusion that sits alongside the FEIE, which matters given central-London rents. Model this before agreeing on a gross figure — the headline allowance and the after-tax value can diverge sharply.
RSUs and stock options
Equity is where cross-border packages most often go wrong. Restricted stock units and options are calculated based on the number of workdays between the grant and the vesting date. If you were granted RSUs while working in New York and they vest after you move to London, the income is apportioned between the two countries based on where you worked over the vesting period — meaning both the IRS and HMRC can tax slices of the same vest, with credits reconciling the overlap. Timing a vest around your arrival date can move real money. See our deep dive on RSU and stock option US tax.
Employer pension
Auto-enrolment into a UK workplace pension is standard. The US-UK tax treaty (Article 18) generally allows contributions and growth to be treated broadly like those of a US-qualified plan. Still, the position is technical and depends on the scheme. Confirm the treaty treatment before you opt into salary-sacrifice arrangements.
Tax equalization versus tax protection
If your employer offers tax equalization, you pay a "hypothetical tax" that is roughly equal to what you would have owed at home, and the company covers the actual UK and US tax bills. Tax protection is looser — the employer only tops you up if the assignment leaves you worse off. Equalization removes the downside but also the windfall; know which one is on the table before you compare headline numbers.
Package element at a glance
Element
UK treatment
US treatment
Base salary
PAYE + employee NIC
Worldwide, FEIE or FTC
Signing bonus
Fully taxable
Fully taxable; FTC relief
Relocation
£8,000 exempt, excess taxable
Taxable; FTC relief
Housing allowance
Taxable employment income
Foreign housing exclusion may apply
RSUs / options
Taxed on the UK workday portion
Sourced by grant-to-vest workdays
Employer pension
Relief via workplace scheme
Treaty Article 18 treatment
The reporting you now owe — beyond the tax return
Opening a UK current account to receive your salary quietly triggers two US information filings. You must file an FBAR (FinCEN Form 114) once your foreign accounts exceed $10,000 in aggregate at any point in the year, and potentially Form 8938 for specified foreign financial assets above the relevant threshold. Penalties for missing these are severe and unrelated to whether any tax was due.
The bigger trap is investing. Most UK funds, investment trusts and — critically — Stocks and Shares ISAs are Passive Foreign Investment Companies (PFICs) in the US's eyes, dragging you into punitive Form 8621 reporting. The UK tax wrapper an adviser cheerfully recommends can be a US tax disaster. As a rule, keep US persons investing in US-domiciled funds until you have taken advice.
Two calendars, two sets of deadlines
The countries do not share a tax year, which catches almost everyone.
Filing
Key date
US return (abroad, automatic extension)
15 June (tax due 15 April)
US extended return
15 October
UK Self Assessment (online)
31 January
FBAR
15 April (auto-extension to 15 October)
Case study: Maya's Series B move
Maya, a US citizen product lead, took a London role: a £140,000 base salary, a £20,000 signing bonus, £15,000 relocation support, and RSUs granted 18 months before her move that vested three months after she arrived. She landed on 1 September, so we claimed split-year treatment — UK resident only from September. We claimed the FIG regime to shelter gains in the US brokerage account she held, and used the Foreign Tax Credit rather than FEIE because her high UK tax more than covered the US bill and generated carryforward credits.
Of the relocation payment, £8,000 was UK-exempt and credits covered the balance. Her RSU vest was apportioned — roughly 85% US-sourced by workday, 15% UK — and the credit reconciled the overlap. We filed her FBAR and Form 8938, and steered her away from a colleague's ISA suggestion before it became a PFIC problem—net result: no double taxation and a documented position with HMRC and the IRS.
Negotiation and first-year checklist
Before you sign, ask for offers to be quoted net of a tax-equalization policy where possible, request a vest-timing conversation on any equity, and get relocation structured to use the £8,000 exemption. In your first year: set your arrival date, confirm your certificate-of-coverage position, deliberately choose FEIE or the Foreign Tax Credit, register for Self Assessment, and diarise both tax calendars. A ninety-minute planning session before day one routinely saves more than it costs.
Talk to TaxYork before you sign
Getting the cross-border tax right and getting the London job package right is far cheaper before you accept than after. TaxYork's dual-qualified US-UK advisers model your specific offer end-to-end. Email hello@taxyork.com, call 020 3488 8606, or visit taxyork.com to book a pre-move review.