US UK Tax Accountant for Executives: Pay, Equity and Moves

US UK tax accountant for executives: an introduction

A US UK tax accountant for executives prepares the returns that follow senior pay across the Atlantic: salary, bonuses, equity and benefits earned partly in each country. The difficulty is rarely the rate of tax. Instead, it is deciding which country taxes each slice of pay, and in which year. Getting that right on both returns stops the same bonus being taxed twice.

This article covers the issues that come up most for executives on a move. Our guide for founders and executives covers the wider picture, including company ownership. Treaty claims are handled through our treaty relief service.

When a US UK tax accountant for executives is needed

Typically, the need arises when pay is earned in one country and paid in another. For example, an American director transfers to London mid-year. Alternatively, a British executive moves to New York but keeps unvested UK shares. In both cases, each country taxes part of the same pay. Therefore, the returns need a single allocation that both sides accept.

How are bonuses taxed when you move between the US and UK?

Each country usually taxes the part of a bonus that relates to work done there. As a result, a bonus paid after a move is often split by workdays across both returns.

The US rule on sourcing

Sourcing is the rule that decides where income arises. For pay, US regulations generally use a time basis. Under Treasury Regulation 1.861-4, compensation is usually sourced by the days worked in each place. However, the regulation allows other methods in some cases, such as certain fringe benefits. For a US citizen, sourcing does not change what is taxable. Instead, it decides how much UK tax can be credited.

The UK side

The UK taxes employment income of UK residents, with special rules for arrivals and departures. Split year treatment is the rule that divides a tax year into a UK part and an overseas part. HMRC's guidance on split year treatment sets out the cases. Consequently, a bonus for work done before you arrived may fall outside UK tax. A bonus for work done in London after arrival falls inside it.

Matching the two returns

The workday count must match on both returns. Therefore, we build one travel and workday record for the year. We then use it for the US foreign tax credit and the UK return. In our experience, executives who keep a simple diary save weeks of reconstruction. A US UK tax accountant for executives will usually ask for calendars, travel records and payroll reports.

What is Overseas Workday Relief, and who can claim it?

Overseas Workday Relief is a UK relief for new arrivals on pay for work done abroad. From 6 April 2025, it sits within the four-year foreign income and gains regime and carries a financial limit.

Who qualifies

GOV.UK explains the 4-year foreign income and gains regime. Broadly, it is for the first four years of UK residence after at least ten years of non-residence. Therefore, an American executive arriving in London for the first time often qualifies. However, someone returning after a short spell abroad may not.

The financial limit

HMRC's manual explains the Overseas Workday Relief financial limit. The relief for a qualifying year is the lower of 30% of the relevant employment income and £300,000. Moreover, the limit applies across tax years for the same qualifying year. HMRC's overview of the relief covers the wider rules, and transitional rules apply to some earlier arrivals.

The 2026 PAYE change

Before 2026, PAYE could give in-year relief without applying the limit. HMRC's policy paper on aligning PAYE with the Overseas Workday Relief limit changes that from 6 April 2026. Consequently, payroll now caps the in-year relief, and the claim is settled on the Self Assessment return.

How it interacts with US tax

For a US citizen, Overseas Workday Relief reduces UK tax on the non-UK workdays. However, the US still taxes that income. With less UK tax to credit, US tax may become payable on those days. Therefore, a US UK tax accountant for executives models both returns before the relief is claimed. Sometimes the saving in the UK is partly lost in the US.

How does tax equalisation work on the returns?

Tax equalisation is an employer policy that keeps you paying roughly the tax you would have paid at home. The employer meets any extra cost, and that payment is itself taxable income.

The hypothetical tax

Under equalisation, the employer deducts a hypothetical tax from your pay. A hypothetical tax is an estimate of what you would have paid had you stayed at home. The employer then pays your actual US and UK tax. Therefore, your take-home pay stays close to what it was before the move.

The gross-up problem

When an employer pays your tax, that payment counts as more pay. In turn, it attracts more tax, which the employer also pays. This loop is called a gross-up. Additionally, the tax paid in one year often relates to an earlier year. As a result, equalisation payments create trailing income on both returns for years after a move.

The settlement calculation

Most employers run a year-end settlement once the returns are filed. It compares the hypothetical tax with the actual position. The returns therefore need to be accurate and on time, because the settlement depends on them. In our experience, many employers appoint a provider for this. However, executives with personal income beyond their pay often need their own preparer as well.

What happens to equity that vests after you move?

Equity earned across both countries is usually split by workdays between grant and vesting. Each country then taxes its share, even years after you have left.

Restricted stock units

A restricted stock unit is a promise of shares that vest after a period of service. Both countries generally tax RSUs at vesting. However, each looks back over the period in which the shares were earned. HMRC's guidance on time apportionment for internationally mobile employees explains the UK approach. Our article on RSU tax in the US and UK works through an example.

Options and other awards

Share options follow similar ideas, although the taxable moment can differ. In the US, many options are taxed at exercise. In the UK, unapproved options are also generally taxed at exercise. Nevertheless, the sourcing period may run from grant to vesting. Therefore, each award is tracked separately on both returns.

Trailing liabilities after you leave

A trailing liability is tax due in a country after you have left it. For instance, a British executive in New York may still owe UK tax on RSUs earned in London. Equally, an American who leaves London still reports UK-sourced vesting on the US return. A US UK tax accountant for executives keeps a schedule of every open award and its sourcing period.

What about social security on a transfer?

The US-UK totalization agreement usually keeps you in one country's social security system at a time. A certificate of coverage proves which one.

The certificate of coverage

A totalization agreement is a treaty that stops double social security contributions. According to the IRS page on totalization agreements, you claim exemption by obtaining a certificate of coverage. Typically, the employer applies for it before the transfer. Without one, both US and UK contributions may be deducted.

Why it matters for the returns

Social security contributions are not income tax, so they are not creditable in the same way. Therefore, double contributions are a real cost. Moreover, the certificate affects payroll in both countries. We check it early, because fixing payroll later takes longer than getting it right at the start.

Which credits and forms tie the two returns together?

The US return claims UK tax through the foreign tax credit, and sometimes discloses treaty positions. The UK return claims relief for any US tax that the treaty gives the US the first right to collect.

The foreign tax credit

UK income tax rates reach 45% on income over £125,140, according to GOV.UK's page on Income Tax rates. Above that level, there is no Personal Allowance. Consequently, UK tax on senior pay usually exceeds the US tax on the same income. The US return claims it on Form 1116. Excess credits can carry forward to later years.

Treaty disclosures

Some positions rely on the US-UK treaty, such as residence tie-breakers or pension contributions. These may need disclosing on Form 8833. Our guide to the US-UK double taxation treaty explains when that applies.

What should executives send their accountant each year?

Send payroll reports from both countries, equity statements, a workday record and any equalisation settlement. With those, a US UK tax accountant for executives can prepare both returns from the same figures.

Payroll and benefits

Start with the UK P60 and P11D, and the US Form W-2 if a US payroll still runs. A P11D is the UK form that reports taxable benefits, such as private medical cover. Moreover, many executives on a transfer are paid through two payrolls at once. Therefore, we reconcile both payrolls to the workday record before anything is filed. This avoids the same salary appearing twice.

Equity statements

Next, send the broker statements for every vesting, exercise and sale during the year. Additionally, send the original grant letters, because they show the earning period. A US UK tax accountant for executives needs the grant date, the vesting dates and the value at vesting for each tranche. Without the grant letters, sourcing periods have to be estimated.

Travel and workdays

Finally, send a calendar showing where you worked each day. Flight records and expense reports help fill gaps. In our experience, a monthly summary kept as you go is far easier than rebuilding a year later. It also supports the UK statutory residence test, which counts days of presence.

What changes in the year you leave the UK?

In the year you leave, the UK return usually covers only the UK part of the year, if split year treatment applies. However, the US return still covers the whole year for a citizen.

The final UK return

Your final UK return shows UK employment income up to departure. Furthermore, it records any later payments for UK work, such as a bonus paid after you leave. Those payments can remain taxable in the UK. Consequently, the final return often needs revisiting when the bonus arrives.

The ongoing US return

For a US citizen, nothing stops at departure on the US side. The US return continues as before, now with US income and a smaller UK credit. Therefore, the year of departure is often the most complex of all. A US UK tax accountant for executives plans it before the move date, not after.

An example: a mid-year transfer to London

Consider a typical case. Daniel is a US citizen and senior vice-president at a US bank. He transfers from New York to London on 1 July. His bonus for the year is paid the following March. He also holds RSUs granted in New York that vest over three years.

First, his workday diary shows how many days he worked in each country. The bonus is split on that basis across both returns. Next, he qualifies for the four-year regime, so his UK return claims Overseas Workday Relief on days worked in the US after arrival. However, the US return then has less UK tax to credit on those days. Finally, each RSU tranche is sourced from grant to vesting and reported in both countries. This is an illustrative example, not a real client.

How US UK Tax Experts can help

US UK Tax Experts prepares US and UK returns from one file, so the two agree. For executives, that includes workday allocation, bonus and equity sourcing, Overseas Workday Relief claims and the foreign tax credit. Additionally, we keep a schedule of trailing awards for the years after a move. We prepare and file returns; we do not give investment or financial advice. If you need a US UK tax accountant for executives who works on both returns at once, we can help.

Conclusion

Senior pay crosses borders in ways that ordinary payroll does not handle well. Bonuses, equity and equalisation payments are split by workdays and taxed in both countries over several years. The answer is one record of days and awards, used consistently on both returns. With that in place, relief is claimed once and in the right place.

Contact us

If you are an executive moving between the US and the UK, email hello@usuktaxexperts.com or use our contact form. Tell us your move date, how you are paid and whether your employer runs tax equalisation. We reply within one working day.