Accountants for US and UK: US Pro Athletes in Britain

US-citizen athletes living in Britain file in both countries every year. The UK taxes them as residents on worldwide income, and the US taxes them as citizens. To avoid double tax, salary, bonuses and prize money must be split by the days worked in each country. That split decides which country taxes first and which one gives the credit.

Specialist Accountants for US and UK filings are not a luxury for an elite athlete. Very few advisers work regularly with both a UK payroll and a US Form 1116, and the errors tend to go unnoticed until an IRS or HMRC enquiry, often years later. At Jungle Tax we prepare both returns for US-citizen footballers, golfers, tennis players and other professionals based in Britain. This guide covers how each type of income is sourced, what goes on each return, and how to bring missed US years up to date.

Why is a US-citizen athlete in the UK taxed twice?

The United States taxes its citizens and green card holders on worldwide income wherever they live. The UK taxes anyone resident under the Statutory Residence Test (SRT) on worldwide income too, with some relief for recent arrivals. A US citizen on a UK contract who competes across Europe and plays some fixtures or events in America is therefore liable in both countries on the same income.

The US-UK income tax treaty does not stop this. Its saving clause keeps the US right to tax its own citizens as if the treaty did not exist. What the treaty does do is set an order of priority. For a US citizen resident in the UK, Article 24 works in three steps:

• The US keeps first taxing rights over US-source income, meaning income it could tax even if you were not a citizen, such as pay for days worked in America and prize money won at US events. The UK then credits that US tax against its own tax on the same income.
• The UK has first taxing rights over UK-source and third-country income. The US credits the UK tax, and any third-country tax, through the foreign tax credit.
• A re-sourcing rule lets income be treated as foreign-source for US purposes where that is needed to stop the same income being taxed twice. It comes with its own separate foreign tax credit limitation.

All three steps depend on the source of each pound or dollar. For an athlete who is paid by the season but works in several countries, the source is fixed by counting days.

How does duty-day sourcing work under Treas. Reg. 1.861-4?

For US purposes, employee pay for services performed partly inside and partly outside the United States is sourced on a time basis under Treasury Regulation 1.861-4(b)(2)(ii). The idea is simple, even if the detail is not:

US-source compensation = total compensation for the period × (days of service in the US ÷ total days of service in the period)

Everything else is foreign-source. Only foreign-source income creates room to use a foreign tax credit. So an athlete who counts days carelessly either overstates the credit, which leaves unpaid US tax on US days, or understates it and pays tax twice.

What counts as a duty day for an athlete?

The rule counts days on which you perform services under the contract. In professional sport, the courts and the IRS have looked at what the contract actually pays for. That usually covers:

• Pre-season training camp and mandatory pre-season fixtures.
• Regular-season match days, required training sessions and required travel days with the squad.
• Post-season, play-off and cup fixtures that the contract covers.
• Required commercial or media days under the playing contract, if the salary pays for them.

Off-season days are the most disputed point. Courts have generally not accepted that the off-season is part of the service period unless the contract requires conditioning, appearances or other services then. The contract wording and your training records will decide this, so we read the playing contract before we count a single day.

Which parts of the package are sourced differently?

• Base salary is sourced on the duty-day ratio for the contract period.
• Performance and appearance bonuses tied to particular fixtures or events are usually sourced to where those events took place. Season-long bonuses (for a finishing position, qualification or team trophies) are generally spread over the days in the season that earned them.
• Multi-year payments, such as loyalty payments or deferred sums earned over several seasons, fall under the multi-year compensation rule. They are spread over the whole period the payment relates to, not just the year it is paid.
• Signing bonuses need careful review. Under published IRS ruling guidance, a genuinely unconditional signing bonus is not pay for services and is sourced differently. One that must be repaid if you do not play is usually treated as pay for services.
• Certain fringe benefits, such as housing, children's education and local transport, can be sourced on a geographic basis rather than by days.

The regulations also allow an alternative basis if the taxpayer can show it reflects the source more accurately. It must be supported and disclosed on Form 1116. We use it only when the facts clearly support it, because the IRS examination guidance tells agents to check exactly that box and to compare claimed US days with border-crossing records.

Tournament prize money: golf, tennis and individual sports

Athletes in individual sports usually receive prize money as self-employed income rather than salary. For US purposes, pay for personal services is sourced where the services are performed. Prize money from a US event is US-source income, and prize money from an event elsewhere is foreign-source. No day count is needed for event-specific winnings, but each event must be tagged to its location. A season with forty tournaments in eleven countries needs a schedule, not an estimate.

There are three points specific to US citizens:

• Withholding. The 30% withholding that US event organisers apply to foreign competitors applies only to foreign persons. As a US citizen you should give the organiser a Form W-9, even if you live in London. Otherwise tax may be withheld that you then have to reclaim on your return.
• Third-country withholding. Many European countries withhold tax on prize money paid to non-resident competitors. That foreign tax can count towards your UK credit and your US Form 1116, but only if you keep the withholding certificates.
• State returns. A US citizen living abroad who competes in a US state with an income tax may need a non-resident state return for that state. Several states actively pursue touring professionals. State tax is not covered by the treaty. HMRC may allow unilateral relief, but that needs checking case by case.

For the reverse case, where a foreign-resident performer competes in the UK and has UK tax withheld at source, see our guide to UK Foreign Entertainers Unit withholding for performers. A UK-resident athlete is not in that system for UK events. They settle UK tax through PAYE and Self Assessment.

Endorsement and sponsorship income received personally

Endorsement fees are where many cross-border returns go wrong. An endorsement contract usually pays for two different things, and US law sources them differently:

• Personal services. Shoot days, appearances, clinics and social media content you produce. These are sourced where you perform the work, so a US commercial shoot is US-source even if the sponsor is European.
• Royalties for the use of your name, image and likeness. These are sourced where the rights are used. If the sponsor uses your image in US advertising, that part is US-source royalty income wherever you live.

The US Tax Court has more than once rejected the split written into a contract and imposed its own split based on the economic reality. We therefore split endorsement income by contract, looking at territorial scope, required service days and where the campaign actually ran, rather than reporting one global number. For UK purposes, a UK resident is taxed on worldwide endorsement income anyway. The split matters in the UK mainly for foreign tax credit relief and for any overseas workday relief claim. This guide covers income received personally. Structures that hold commercial rights through a company raise separate issues and are covered elsewhere on our network.

UK residence: the Statutory Residence Test for athletes

UK tax residence is decided each tax year (6 April to 5 April) under the SRT, which HMRC explains in its RDR3 guidance on the Statutory Residence Test. Athletes are unusual under the SRT because their time moves around so much.

• Automatic UK tests. You are UK resident if you spend 183 days or more in the UK, if your only home or homes are in the UK, or if you work full-time in the UK over a 365-day period with at least 75% of your workdays there. A player on a UK club contract normally meets at least one of these.
• Automatic overseas tests. You are non-resident if you spend fewer than 16 days in the UK, or fewer than 46 days if you were non-resident in the previous three years. You are also non-resident if you work full-time overseas with fewer than 91 UK days and fewer than 31 UK workdays. A UK workday is a day with more than three hours of work, and training counts.
• Sufficient ties test. Touring golfers and tennis players often fall through to this test. It combines UK days with family, accommodation, work, 90-day and country ties.
• Split-year treatment may apply in the year you arrive or leave. This can take pre-arrival or post-departure earnings out of UK tax.

If you are UK resident, the UK taxes all of your employment income, including pay for days worked in the US and elsewhere, unless a relief applies. You then claim UK foreign tax credit relief for tax other countries are entitled to charge on those days.

Overseas workday relief for recent arrivals

From 6 April 2025 the old remittance basis was replaced by a residence-based system. A qualifying new resident, meaning someone in their first four UK tax years after at least ten consecutive years of non-residence, can claim overseas workday relief on employment income for duties performed outside the UK. The relief is capped at the lower of 30% of qualifying employment income or £300,000 a year, and it must be claimed on the Self Assessment return.

This interacts with US tax in a way generalist advisers often miss. If the UK exempts pay for non-UK workdays, there is no UK tax on that income for the US to credit. The US may then collect tax on third-country days that would otherwise have been sheltered by UK tax. For some athletes the relief is still worthwhile. For others, especially those with a large share of US days, the combined saving is smaller than it looks. We model both returns together before making the claim.

US and UK tax treatment compared

Issue	United States (IRS)	United Kingdom (HMRC)
Basis of liability	Citizenship: worldwide income, wherever you live	Residence under the SRT: worldwide income, with relief for qualifying new residents
Tax year	Calendar year	6 April to 5 April
Sourcing of salary	Time basis: US duty days ÷ total duty days (Treas. Reg. 1.861-4)	All taxable if resident; foreign workdays matter for foreign tax credits and overseas workday relief
Prize money	Sourced where the event is played	Taxable worldwide if resident; credit for foreign tax withheld
Endorsements	Split between services (where performed) and royalties (where the rights are used)	Taxable worldwide if resident; split matters for relief
Double tax relief	Form 1116 foreign tax credit, general category, plus a separate limitation for treaty re-sourced income	Foreign tax credit relief for US tax on US-source income under Article 24
Main filings	Form 1040, Form 1116, Form 8938, FBAR, state non-resident returns where relevant	PAYE plus Self Assessment, with employment, self-employment, foreign and residence pages
Standard deadlines	15 April; automatic extension to 15 June if you live abroad; 15 October on extension	31 January after the tax year for online returns and balancing payments; payments on account 31 January and 31 July

What goes on each return?

The US return

• Form 1040 reporting worldwide income in US dollars: UK salary and bonuses, prize money, endorsements, investment income and gains.
• Schedule C for self-employed prize money and endorsement income, with properly supported travel, coaching, caddie or support-team costs.
• Form 1116 in the general category for foreign-source earned income, a separate Form 1116 for any treaty re-sourced income, and a passive-category form for investment income. The duty-day workpaper supports the whole calculation.
• Form 2555, the foreign earned income exclusion, which covers about $130,000 of foreign earnings for 2025 and is indexed each year. For athletes earning well above that, the foreign tax credit is usually better. The exclusion never covers pay for US duty days, and revoking it locks you out of it for several years.
• Form 8833 where you take a treaty-based return position, for example re-sourcing under Article 24 or treaty pension positions.
• Social security. Under the US-UK totalisation agreement, an employee of a UK club pays UK National Insurance. A self-employed individual is generally covered only by their country of residence. A certificate of coverage from HMRC supports exemption from US self-employment tax.
• Information returns: FinCEN Form 114 (FBAR) for UK accounts over the aggregate threshold, Form 8938 for specified foreign financial assets, and Form 8621 for UK and European funds treated as PFICs. ISAs are fully taxable for US purposes, and UK pensions still need to be reported.
• State returns for US states where you played, trained or competed, if their rules require one.

The UK return

• PAYE on club salary, with a Self Assessment return reconciling everything else.
• Employment pages for salary, bonuses and benefits, and self-employment pages for prize money and personal endorsements.
• Foreign pages claiming foreign tax credit relief for US federal tax on US-source income and for third-country withholding. HMRC's treaty guidance on Article 16 (entertainers and sportsmen) sets out the sporting-income article.
• Residence pages covering split-year treatment and any overseas workday relief claim.

The two returns cover different tax years, so the same duty-day diary has to be cut on a calendar-year basis for the IRS and on an April-to-April basis for HMRC. The US tax credited in the UK must match the US tax actually paid on the US-source slice, so the returns are prepared together, not in sequence by separate firms.

A worked illustration

Take a US-citizen athlete who has been UK resident for years, with a season salary of £3,000,000 and 250 contractual duty days in a calendar year. Of those, 200 are in the UK, 30 in continental Europe and 20 in the United States, for a pre-season tour and friendly fixtures.

• US-source salary: 20 ÷ 250 × £3,000,000 = £240,000. The US taxes this first, and the UK credits that US tax against the UK tax on the same slice.
• Foreign-source salary: £2,760,000. The UK taxes this first, and the US gives a Form 1116 credit, which at UK rates usually removes the US liability on this slice.
• What goes wrong without sourcing: if all £3,000,000 is reported as foreign-source, the US return shows no tax on the US days and the UK return gives no credit for US tax. The result is US tax underpaid on the US days, which comes to light in an IRS examination using border-crossing data. If the error goes the other way and too many days are treated as US days, the athlete pays tax twice.

These figures are illustrative. Actual results depend on exchange rates, bonus timing, state liabilities and whether overseas workday relief is claimed.

Catching up missed US years

Many athletes who grew up in the US and moved abroad young, or who were born abroad to an American parent, have not filed US returns since leaving. Others filed but put every figure through as foreign-source with no day count. Both can be fixed. The route depends on your history and your US days.

• Streamlined Foreign Offshore Procedures. File three years of amended or delinquent returns and six years of FBARs, certify that the failure was non-wilful, and pay any tax and interest. No penalty applies. Eligibility requires meeting a non-residence test: in at least one of the last three years, having no US abode and being physically outside the US for at least 330 full days.
• The 330-day trap for athletes. A player with a US pre-season tour, US tournaments or long US training blocks can miss 330 days in every year of the look-back period. If so, the foreign procedure is not available. The Streamlined Domestic Offshore Procedures carry a 5% miscellaneous offshore penalty and require that US returns were previously filed. Athletes who fail both tests need a different plan, and the order in which returns are filed matters.
• Returns filed without sourcing. Where returns were filed but duty-day sourcing was ignored, amended returns can correct the foreign tax credit in either direction. UK claims for credit for US tax paid late must be made within HMRC's time limits, so the two corrections need to be coordinated.
• Information returns only. If all income was reported and only FBARs were missed, the delinquent FBAR route may be simpler.

Our IRS streamlined filing experts handle eligibility, the non-wilfulness narrative and the six-year FBAR build. The FBAR penalty calculator gives an early sense of the exposure you are leaving unresolved. For ongoing annual preparation across both countries, see our US-UK tax accountants service.

Records that protect the position

• A daily location and activity diary covering matches, training, travel and commercial days, with sessions over three hours marked for the SRT.
• Team schedules, tournament entry confirmations and passport stamps or travel itineraries.
• Playing and endorsement contracts showing service periods, territorial scope and bonus triggers.
• Payslips, P60s, prize money statements and foreign withholding certificates.
• Year-end statements for every UK and overseas account, pension and ISA.

Confidential preparation for elite athletes

An elite career is short and well paid, and it is not well served by a US preparer who does not know the SRT or a UK firm that has never completed a Form 1116. Jungle Tax prepares both returns from one duty-day record, reconciles the credits so neither country is overpaid, and brings missed US years up to date through the right procedure. We work discreetly with you and your representatives. To arrange a confidential consultation, contact our cross-border team.