Compare taxes and see how much you save moving from New York to UK
The New York to London migration is one of the most common finance and banking moves in the world — and the tax comparison is crucial. New York state income tax at $100,000 is approximately $5,398, while UK national income tax on equivalent earnings is roughly $23,700 USD. The UK costs significantly more on national income tax alone. However, New York residents also pay US federal tax (~$17,344 at $100K), bringing total NY burden to ~$22,742 — very close to UK national rates. Americans moving from New York to London still file US federal tax returns annually — the IRS taxes worldwide income regardless of where you live. The US-UK tax treaty provides foreign tax credits that typically prevent true double taxation, meaning you pay the higher of the two rates rather than both. London salaries in finance often compensate for higher tax rates, but the comparison is tighter than most New Yorkers expect.
High Income Tax State
8 tax brackets from 4% to 10.9%
Progressive Tax System
Basic rate 20%, higher rate 40%, additional rate 45%
At $100,000 income:
New York state income tax ($5,398) is lower than UK national income tax (~$23,700) at $100,000. However, NY residents also pay US federal tax — total NY (state + federal) of ~$22,742 is very close to UK national tax alone. US expats in the UK use foreign tax credits to avoid double taxation.
| Income | NY Tax | GB Tax | Savings | 10-Year |
|---|---|---|---|---|
| $50,000 | $2,246 | $6,700 | -$4,454 UK costs more | -$44,540 |
| $75,000 | $3,609 | $14,000 | -$10,391 UK costs more | -$103,910 |
| $100,000 | $5,398 | $23,700 | -$18,302 UK costs more | -$183,020 |
| $150,000 | $8,932 | $44,000 | -$35,068 UK costs more | -$350,680 |
| $250,000 | $16,156 | $88,000 | -$71,844 UK costs more | -$718,440 |
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Transfer Money Internationally →Yes. All US citizens and green card holders must file a US federal tax return regardless of where they live. Moving from New York to the UK eliminates your New York state tax obligation (once you establish non-residency) but does not remove your US federal tax liability. The US-UK tax treaty and foreign tax credits typically prevent double taxation — you pay the higher of the two rates, not both in full.
New York is one of the most aggressive states for taxing departing residents. The New York Department of Taxation requires you to establish domicile in another jurisdiction and maintain a 'permanent place of abode' test. Simply moving to the UK does not automatically terminate New York tax residency. You must change your domicile, spend fewer than 183 days in New York, and not maintain a permanent place of abode in the state.
Both are world-leading financial centres with comparable salaries at the senior level. NYC finance workers pay New York state tax (up to 10.9%) + NYC city tax (3.876%) + federal (up to 37%) — an effective rate that can exceed 50% at high incomes. London finance workers pay UK national income tax (up to 45%) with no additional city tax, but face the 60% trap between £100K-£125K. At $250K+, total US burden (NY+NYC+federal) and UK burden are broadly similar.
Between £100,000 and £125,140, UK taxpayers lose their £12,570 personal allowance at a rate of £1 for every £2 earned. This creates a 60% effective marginal rate in that band — equivalent to roughly $128,000-$160,000 USD at current rates. New Yorkers earning in this range who move to London will face this trap, which is not present in New York's tax system.
The Foreign Earned Income Exclusion (FEIE, IRS Form 2555) allows qualifying US expats to exclude up to $126,500 (2024) of foreign earned income from US federal tax. However, for UK-based Americans where UK tax rates often exceed US rates, it's generally more beneficial to use the Foreign Tax Credit instead of the FEIE — crediting UK taxes paid directly against US liability.
Rarely, based on income tax alone. UK national income tax is higher than New York state income tax at all income levels. Total US burden (NY state + federal) is close to UK national tax at $100K, but does not include NYC city tax, which makes NYC one of the highest-taxed locations in the US. The decision is usually driven by career opportunity, lifestyle, and proximity to family rather than tax optimization.
Employed workers in the UK pay National Insurance: 8% on earnings between £12,570 and £50,270, and 2% above. However, a US-UK totalization agreement means you generally won't pay into both Social Security and National Insurance simultaneously — you'll contribute to one system depending on your employment situation.