Cross-Border Remote Work: US–UK Tax Rules for 2026

Remote work made the location of a job negotiable. Tax law did not follow. If you are a US person working remotely from the UK, or a UK resident working for a US employer, five separate questions decide what you owe and to whom.

Short answer

Employment income is generally taxed where the work is physically performed. A US citizen working from the UK owes UK tax on that salary through PAYE or self-assessment, and must still report it on a US return, where the Foreign Tax Credit or the Foreign Earned Income Exclusion normally removes the US liability. Social security follows the US–UK totalization agreement, and a handful of US states will keep taxing you unless you have properly cut ties.

1. Where are you tax resident?

UK. The Statutory Residence Test decides it, principally by days in the UK and ties (home, work, family). Most people working remotely from the UK for more than a few months are UK-resident from arrival and taxable on worldwide income — or, for newer arrivals, on UK income plus whatever is not covered by the four-year Foreign Income and Gains regime that replaced the remittance basis in April 2025.

US. A US citizen or Green Card holder is a US taxpayer wherever they live. A UK national is only a US tax resident if they meet the substantial presence test (roughly 183 weighted days over three years) or hold a Green Card.

When both countries claim you as resident, the treaty's tie-breaker (permanent home, centre of vital interests, habitual abode, nationality) decides — but note that the treaty cannot stop the US taxing its own citizens.

2. Where is the salary sourced?

Wages are sourced by workdays. Salary for days worked in the UK is UK-source; days worked on a trip to the US are US-source. This matters in both directions:

• A US citizen in the UK who spends 20 workdays a year in the US has 20 days of US-source wages that the FEIE cannot exclude and that the UK must give credit for, not the other way round.
• A UK resident employed by a US company who never sets foot in the US has no US-source wages, even though the employer is American — and the US employer should not be withholding US tax on them.

The treaty's employment article adds a short-trip exemption: a UK resident working briefly in the US is not taxed there if present under 183 days in any twelve-month period, paid by a non-US employer, and the cost is not borne by a US permanent establishment. The reverse applies for US residents in the UK.

3. Which country's social security?

Under the US–UK totalization agreement you pay into one system, not both. Someone sent by a US employer to the UK for up to five years can stay in US Social Security with a certificate of coverage; someone hired locally, or self-employed and resident in the UK, pays UK National Insurance and is exempt from US self-employment tax with a certificate from HMRC. Without a certificate, the IRS expects the full 15.3% self-employment tax on top of Class 4 NI — one of the most expensive and most common remote-worker mistakes.

4. Does a US state still want tax?

Federal law is only half of the US side. States such as California, New York, Virginia, South Carolina and New Mexico are known for treating residents who move abroad as still domiciled there unless they can show a permanent change of home. Keeping a driving licence, voter registration, a car or a house in the state all count against you. Planning the exit — and documenting it — before the move is far easier than arguing it afterwards.

5. Employer-side consequences

An employee working from the UK can create a UK payroll obligation and, in some structures, a taxable presence for the employer. Many US companies solve this with a UK employer-of-record or a UK entity; a few simply ask the employee to handle it, which usually means UK self-assessment and a conversation with the employer about who bears the cost. This is an area where getting the paperwork right at the start avoids a year-end surprise.

Putting it together: a typical case

A US citizen software engineer moves to Manchester in March 2026, keeps her US employer, and is paid in dollars into a US account.

• UK-resident from arrival; UK tax due on salary from March via PAYE (employer of record) or self-assessment.
• US Form 1040 for 2026 reporting the full year's salary; Foreign Tax Credit on the UK tax from March, or FEIE under the physical presence test once she has 330 days abroad, whichever is better on the numbers.
• US days worked while visiting family: US-source, excluded from the FEIE calculation, creditable in the UK.
• National Insurance in the UK; certificate of coverage only if she was formally seconded for under five years.
• If she left from California: a clear exit — licence, registration, lease — documented for the year of the move.
• FBAR and possibly Form 8938 once UK accounts exceed the thresholds.

Sources

• IRS — US taxpayers residing outside the United States
• IRS — United Kingdom (UK) tax treaty documents
• Social Security Administration — US–UK totalization agreement
• HMRC — Tax on foreign income