How Travel Dates Impact Your International Taxation (UK and US) – And How to Keep Track

International travel can be a key part of life for global professionals, expats, and frequent travellers. However, your travel dates can significantly influence your tax liabilities, particularly in the UK and US. Understanding these impacts and how to keep accurate records can help you avoid penalties and optimize your tax situation. Here’s a comprehensive guide.

Why Your Travel Dates Matter for Taxes

Tax Residency Rules

UK Tax Residency: Your residency status for UK taxes depends on the Statutory Residence Test (SRT), which considers factors like the number of days spent in the UK, ties to the country, and your purpose for visiting. Exceeding specific thresholds can trigger UK tax residency and liability on worldwide income.

US Tax Residency: As a US citizen or green card holder, you’re taxed on worldwide income regardless of where you live. However, the Substantial Presence Test (SPT) applies to non-citizens, counting their days in the US over a rolling three-year period. Exceeding 183 qualifying days makes you a US tax resident.

Double Taxation

Overlapping tax residency in the UK and the US can lead to double taxation, where both countries claim tax on the same income. Tax treaties and credits may alleviate this but require careful documentation.

Exemptions and Reliefs

  • Travel affects your eligibility for certain tax benefits, like the Foreign Earned Income Exclusion (FEIE) in the US, which has strict time-based tests.

  • =In the UK, spending too much time abroad might disqualify you from claiming non-resident tax status or certain exemptions.

Impacts on UK and US Taxes

UK Taxes

  • Becoming a UK Tax Resident: Spending more than 183 days in the UK generally makes you a resident, subjecting you to taxes on worldwide income.

  • Split-Year Treatment: If you enter or leave the UK partway through a tax year, you might qualify for split-year treatment, which reduces your residency period.

  • Non-Resident Status: Long absences from the UK may allow you to claim non-resident status, exempting foreign income.

US Taxes

  • Filing Requirements: US citizens and green card holders must file annually, even if they don’t live in the US. Residency based on the SPT adds filing obligations for non-residents.

  • Foreign Income Reporting: Use the FEIE or Foreign Tax Credit (FTC) to reduce the impact of US taxation on income already taxed in the UK.

Double Taxation Relief

  • US-UK Tax Treaty: The treaty ensures certain types of income (like pensions) aren’t taxed twice. Claiming these benefits requires specific forms and documentation.

 
Diagram explaining how travel dates influence tax residency and liabilities for US expats in the UK and US

Tips for Minimizing Tax Liabilities

  1. Plan Your Travel Strategically

    Avoid staying too many days in one country to prevent residency complications.

    Time your travel around tax year boundaries (e.g., 6 April in the UK, 1 January in the US).

  2. Work with Experts

    International tax professionals can guide you through residency rules, treaty claims, and efficient tax planning.

  3. Leverage Tax Reliefs

    Claim treaty benefits, deductions, or exclusions to minimize liabilities.

 

Conclusion

Your travel dates are more than just a calendar entry—they’re a critical factor in determining your tax obligations. Staying organized with robust tracking systems and seeking expert advice can simplify the complexities of international taxation, ensuring compliance while maximizing relief. Whether you’re an expat or a frequent traveller, proactive planning is key to navigating your UK and US tax obligations seamlessly.

At Bambridge Accountants, we specialise in international and cross-border tax matters, helping individuals navigate complex rules around UK and US tax. For tailored advice on managing cross-border tax issues, book a call with us.