US UK Tax Returns Preparation: London to New York Secondment

A US citizen seconded from London to New York usually files a UK Self Assessment return and a US federal return for every year the secondment touches, plus a New York return. Many secondees stay UK resident throughout. The Foreign Earned Income Exclusion (FEIE) stops applying to New York pay, and the foreign tax credit decides who is paid first.

For a banker, lawyer or fund professional moving from a London desk to a Manhattan one for six to twenty-four months, US UK tax returns preparation gets much harder in the year of the move. Your UK residence position, your treaty residence, your New York State and City status, your employer's two payrolls and the sourcing of your bonus all change during the same year. None of them follow the same calendar. This guide explains how each return is prepared, in what order and with what evidence. It is written for secondees who are compiling or checking their own filings, whether they are current or catching up on a year that went wrong.

Why is a London-to-New York secondment harder to file than a permanent move?

A permanent relocation is usually simple on the UK side: you leave, you qualify for split-year treatment, and the UK stops taxing your overseas earnings from the date you depart. A secondment is different because it is temporary by design. You keep your London home, your family may stay behind, you often stay on the UK payroll, and you plan to come back. On the UK side, those facts often keep you resident. On the US side, they do not stop your tax home moving to New York.

The result is a dual-residence year. The UK taxes you on your worldwide income, the US taxes you as a citizen, New York taxes your New York work days (and possibly everything), and the relief that stops double taxation depends on the order in which the credits are claimed. Competitor guides usually cover the Statutory Residence Test or New York residency on its own. The difficulty lies in how the two interact.

Are you still UK resident while working in New York?

UK residence is decided tax year by tax year (6 April to 5 April) under the Statutory Residence Test (SRT). HMRC's own worked guidance is in RDR3, the SRT guidance note. For a secondee, three parts of it matter:

• The automatic overseas test for full-time work abroad. You are automatically non-resident for a tax year if you work full-time overseas throughout that year (broadly an average of 35 hours or more a week), spend fewer than 91 days in the UK, and work more than three hours on fewer than 31 UK days. The test looks at the whole tax year. A secondment that never covers a complete 6 April to 5 April period cannot meet it.
• The automatic UK tests. Spending 183 or more days in the UK makes you resident. The "only home" test rarely applies to a secondee who rents in New York and spends real time there.
• The sufficient ties test. Where no automatic test settles the question, UK days are weighed against ties: family, accommodation, work, the 90-day tie and (for leavers) the country tie. A secondee who keeps a London home available and has a spouse or minor children in the UK often has enough ties to remain resident even with modest UK day counts.

Does split-year treatment apply to a secondment?

Only if one of its cases genuinely applies. Case 1 (starting full-time work overseas) is the one secondees assume they have. However, it requires you to be UK resident in the year of departure and non-resident in the following tax year, which normally means meeting the full-time-work-abroad test for a whole tax year. On return, Case 6 (ceasing full-time work overseas, explained in HMRC's RDRM12190) can split the year you come home, but only if you were non-resident the year before because of full-time work abroad.

Secondment pattern	Typical UK outcome	What it means for the UK return
12 months, 1 September 2026 to 31 August 2027	Resident in 2026/27 and 2027/28; no split year	Worldwide income, including New York salary, is taxable in the UK in both years; relief comes through the foreign tax credit
24 months, 1 July 2026 to 30 June 2028	2026/27 split (Case 1), 2027/28 non-resident, 2028/29 potentially split (Case 6)	New York salary for the overseas part and the full non-resident year falls outside UK tax; UK-duty days in those periods are still UK-source
18 months, 1 January 2027 to 30 June 2028	Depends on whether 2027/28 passes the full-time-work-abroad test, including UK work days on business trips	A few London board or client meetings can push UK work days past the limit and remove the split for both years

The practical point is that a secondment of eighteen months or less that straddles two tax years often leaves you UK resident throughout. Your New York salary then stays inside UK tax. Many secondees who expected otherwise first discover this when their Self Assessment return is prepared.

What UK tax is still due on New York salary?

If you remain UK resident, your employment income for New York duties is taxable in the UK. Since 6 April 2025 there is no remittance basis to shelter it. The new foreign income and gains regime and the reformed overseas workday relief are limited to people in their first four years of UK residence, so a long-standing London resident will not qualify. The UK then gives credit for US tax charged on that income, because the US, as the country where the work is done, has the primary taxing right. You pay the UK only the difference between the UK liability and the creditable US tax. At UK higher and additional rates this is frequently a real residual cost.

How does the US-UK treaty tie-breaker work for a secondee?

Under the treaty's residence article, a US citizen counts as a US resident for treaty purposes only if they have a substantial presence, permanent home or habitual abode in the US. A secondee with a New York apartment usually meets that test, while still being UK resident under the SRT. The tie-breaker then runs in order:

1. Permanent home available. If you kept your London home and rent in New York, you have a permanent home in both countries, so the test does not decide.
2. Centre of vital interests. This looks at where your personal and economic relations are closer, including family, property, investments and your long-term employer. For a secondee whose family remains in London, this often points to the UK.
3. Habitual abode. This compares where you actually live over time, not only in the secondment year.
4. Nationality. A US citizen who is not also a British national is treated as US resident at this stage. Dual nationals go to competent-authority agreement.

The tie-breaker does not stop the US taxing you: the treaty's saving clause preserves US taxation of its citizens. What it changes is the UK charge. If you are treaty-resident in the US for a period, the UK may generally tax only UK-source income for that period, such as pay for days worked in London. If you are treaty-resident in the UK, the UK taxes everything and credits US tax. Whichever position you take should be stated on the UK return and backed by evidence. The typical evidence is home availability, family location, day logs and the terms of the secondment letter.

What changes on the US federal return?

The FEIE and housing exclusion stop for New York pay

The FEIE excludes foreign earned income, which means pay for services performed outside the United States. Pay for work done in New York is US-source, so the exclusion never applies to it, whatever your tax home. For the London part of the arrival year, you can claim the exclusion pro rata on Form 2555 if you pass the bona fide residence test or the physical presence test (330 full days abroad in a chosen twelve-month window ending on or after the move). For 2026 the maximum exclusion is $132,900 before proration. The foreign housing exclusion ends on the same date.

For most London professionals, however, the exclusion is the wrong tool in the arrival year. UK tax on London earnings usually exceeds the US tax on them, so the foreign tax credit tends to give the better result and carries unused credit forward. Timing also matters. If you previously elected the FEIE and now claim credits against income that the exclusion could have covered, the IRS may treat this as a revocation. You then cannot re-elect for five tax years without IRS consent. If you expect to return to London, you need to decide which method you will use across the whole cycle, not just the move year.

The foreign tax credit and the ordering problem

The credit is claimed on Form 1116, generally in the general limitation category for wages. The US credit limitation only allows UK tax against foreign-source income. That creates a pattern secondees need to understand:

• Pay for London work days is UK-source. UK tax on it is creditable in the US, and it usually wipes out the US liability on that pay.
• Pay for New York work days is US-source. The US taxes it first. The UK, if you are still resident, taxes it second and credits the US federal tax. The UK top-up is generally not creditable in the US, because it is tax on US-source income. The treaty's special rules for citizens resident in the UK can re-source income only in limited circumstances.
• Days in third countries during the secondment (for example, deal travel to Frankfurt or Dubai) are foreign-source for US purposes and taxable in the UK if you are resident. They are often missed entirely.

Filing mechanics that change once you live in the US

• The automatic two-month extension to 15 June applies only if both your tax home and your abode are outside the US on the April due date. A secondee living in Manhattan on 15 April does not qualify and needs Form 4868 by the regular deadline.
• Form 8938 thresholds fall sharply once you no longer qualify as living abroad: $50,000 at year end or $75,000 at any time for a single filer, and $100,000 or $150,000 for married filing jointly, compared with $200,000 and $300,000 (single) while abroad. Your London current account, ISA, cash deposits and UK brokerage holdings very likely cross the lower thresholds.
• FBAR reporting continues unchanged. If the aggregate maximum value of your non-US accounts exceeds $10,000, FinCEN Form 114 is due. Our FBAR penalty calculator shows what an omitted year can cost.
• UK funds held in an ISA or general account are usually PFICs and need Form 8621. UK workplace pensions need treaty positions on growth and employer contributions. These do not change when you move, but a New York preparer who is new to UK assets often leaves them out.

New York State and New York City: resident, statutory resident or nonresident?

New York is where secondment returns most often go wrong, and it is almost completely ignored by UK-focused guides. New York has two ways to treat you as a resident:

• Domicile. Your permanent home, the place you intend to return to. A London-based secondee with a fixed return date keeps a UK domicile for New York purposes and is not a domiciliary resident.
• Statutory residence. You maintain a permanent place of abode in New York for substantially all of the tax year (broadly more than eleven months) and spend more than 183 days in the state. Any part of a day counts, with only narrow exceptions.

New York uses the calendar year, not the UK tax year. That creates a pattern that can be predicted in advance:

Calendar year	Typical NY status	What New York taxes	New York City
Arrival year (apartment from September)	Nonresident: abode not held for substantially all of the year	Only New York-source income: wages for New York work days, allocated on Form IT-203	No City tax on wages for nonresidents
Full middle year (apartment all year, 184+ days)	Statutory resident	Worldwide income on Form IT-201, including UK interest, dividends, rent and London-day pay	City resident tax applies to all income at rates of about 3.1% to 3.9%
Departure year	Usually nonresident again	New York-source income only, including any bonus allocated to New York days	No City tax on wages

Two points often cost secondees money. First, New York's resident credit for taxes paid elsewhere covers other US states and certain Canadian provinces, not the UK. A statutory resident with UK rental income or a UK investment portfolio therefore pays New York and City tax on that income with no New York credit. Second, New York's "convenience of the employer" rule can treat days worked from your London home as New York days after you return, if your assigned office is still in New York. This is common when a secondee comes home but keeps a New York reporting line.

Shadow payroll, PAYE and cash-flow double taxation

Most secondees stay on the UK payroll with PAYE and National Insurance. The US host entity runs a shadow payroll that reports the same pay for federal and New York withholding without paying it a second time. In practice, three problems recur:

• Full PAYE plus full US withholding. Until the Self Assessment return claims foreign tax credit, you are over-withheld in both countries. Some employers agree a modified PAYE arrangement with HMRC. If yours did not, the refund depends on a correctly prepared return.
• PAYE stopped too early. Payroll teams sometimes switch to a no-tax code assuming non-residence. If you in fact remain UK resident, the underpayment falls on your return, with interest.
• Social security. Under the US-UK social security agreement, a UK employer can obtain a certificate of coverage from HMRC for a posting expected to last up to five years. You then keep paying UK National Insurance and are exempt from FICA. Without a certificate, both systems may charge.

Where you are tax-equalised, the employer's settlement calculation depends on your final UK and US returns. Errors in either one carry through into the equalisation payment, and are sometimes only found when HMRC or the IRS writes to you years later.

Housing, travel and allowances: the 24-month and one-year rules

The two systems measure "temporary" differently. For UK purposes, a secondment expected to last no more than 24 months can be a temporary workplace, so employer-paid accommodation and subsistence may escape UK tax. Separate UK rules cover certain travel costs for overseas duties and family visits. For US purposes, an assignment realistically expected to exceed one year is not temporary, so the same New York housing allowance becomes taxable wages on the shadow payroll. A 20-month secondment can therefore produce tax-free housing in the UK and taxable housing in the US, which changes the income figures used to calculate the credit.

How is a bonus earned partly in London and partly in New York taxed?

Bonuses cause the most disputes between preparers, because each authority sources the same payment by reference to the period in which it was earned, not the date it was paid. Take a 2026 performance bonus paid in March 2027, with work in London from January to August and in New York from September to December:

1. Build one duty-day ledger. Record each working day by location, including travel days and third-country days. Use the same ledger for all three returns. Mismatched day counts between the IRS, HMRC and New York filings are the most common inconsistency we see.
2. US federal. Source the bonus on a time basis over the performance period. The London-day proportion is foreign-source, and UK tax on it is creditable on Form 1116. The New York-day proportion is US-source.
3. New York. In the nonresident years, allocate the bonus to New York by the ratio of New York work days to total work days in the period it relates to. Do not use the date it arrived in your account.
4. UK. If you were resident throughout, the whole bonus is taxable, with credit for US tax on the New York portion. If a split year or non-resident year applies, the portion earned while UK resident generally stays taxable even if paid after you left.
5. Deferred awards and RSUs follow the same logic but over the grant-to-vest period. A deferred award granted in London and vesting in New York can be partly taxable in all three places.

A preparation checklist for the secondment years

Item	US (IRS and New York)	UK (HMRC)
Tax year	Calendar year	6 April to 5 April
Main returns	Form 1040 with Forms 1116, 2555 (arrival year only), 8938, 8621; FinCEN 114; NY IT-203 or IT-201	Self Assessment with employment, foreign and residence pages
Residence basis	Citizenship; New York uses domicile or statutory residence	Statutory Residence Test; split year only if a case applies
Double-tax relief	Credit for UK tax on foreign-source income only; no NY credit for UK tax	Credit for US tax on income the US may tax first under the treaty
Key evidence	Duty-day ledger, shadow payroll W-2, NY day log, apartment lease dates	P60/P11D, UK day and work-day counts, home and family ties, secondment letter
Normal deadline	15 April (no automatic June extension while living in NY)	31 January after the tax year ends (online)

The order matters. Settle UK residence and treaty residence first. Next, fix the duty-day ledger. Then prepare the US federal return to establish the US tax on New York-source pay, the New York return using the same days, and finally the UK return claiming credit for the US tax. Preparing them in isolation, or in a different order, is how secondees end up double taxed or under-declared.

What if a secondment year was filed wrongly or not at all?

Common catch-up situations include a UK return that treated the secondee as non-resident when the SRT says otherwise, a US return that claimed the FEIE on New York pay, a missing New York return because the employer "handled payroll", and years of unreported London accounts on the FBAR and Form 8938. Each can be corrected. HMRC accepts amendments within twelve months of the filing deadline and overpayment relief claims for up to four years. On the US side, amended returns and, where the failure was non-wilful, the IRS Streamlined Filing Compliance Procedures are available. A secondee who lived in New York for the relevant period generally needs the domestic procedure rather than the Foreign Offshore Procedure, because the non-residency test is not met for those years. That choice affects the penalty, so it needs to be assessed carefully.

Secondees whose affairs extend to UK rental property, carried interest or a significant portfolio will also find our high-net-worth return preparation and UK tax return services relevant. Our cross-border team prepares all of the secondment-year filings together, from one ledger.

Speak to a cross-border specialist

A London-to-New York secondment makes three returns depend on each other, and a mistake in one affects the other two. Jungle Tax prepares UK Self Assessment, US federal and New York returns together for secondees in banking, law and fund management. We use a single duty-day ledger and a clear treaty position, and we bring late or incorrect years up to date. To arrange a confidential consultation before your next deadline, contact our cross-border team.