US Expat Tax Return State Tax After Moving to the UK |
By US-UK Tax Advisors cross-border tax team · Last updated JUL 14, 2026
US Expat Tax Return: State Tax After Moving to the UK US Expat Tax Return and State Tax After Moving to the UK The US expat tax return for Americans...
Key Takeaways
- Covers us expat tax for US-UK cross-border taxpayers
- Applies to US persons with UK ties and UK residents with US income
- Highlights the filing, reporting and tax-treaty points to check
- Get personalised advice before acting on your own facts
US Expat Tax Return: State Tax After Moving to the UK
US Expat Tax Return and State Tax After Moving to the UK
The US expat tax return for Americans living in the United Kingdom has two federal dimensions — the Form 1040 and the FBAR. Still, it may also have a third dimension that many UK-based Americans overlook entirely: US state income tax. Moving from the United States to the United Kingdom does not automatically end your state tax obligations. Furthermore, several US states — most notably California and New York — are known for aggressively asserting that former residents who move abroad remain domiciled in the state and continue to owe state income tax on their worldwide income, even after years of living in the UK. Additionally, the rules for establishing non-residency vary significantly across states — some states accept non-residency based solely on physical absence. In contrast, others require affirmative steps to change domicile and will challenge a domicile change years after the move. Consequently, understanding your state tax position before and immediately after the move to the UK is an essential element of the complete US expat tax return planning exercise — and missing it can produce a continuing state tax liability that compounds across every year of UK residence.
Why State Tax Does Not Automatically End When You Leave
Domicile vs Residence: The Key Distinction
US state income tax is based on domicile — the state you intend to make your permanent home — rather than simply on physical residence. Furthermore, changing your state tax domicile requires both physical presence in a new place and the subjective intention to make that place your permanent home — and most states place the burden of proving a change of domicile on the departing resident. Additionally, moving to the UK does not automatically constitute a change of domicile — the state will ask whether you maintained ties to the state, whether you returned frequently, and whether you intended the UK residence to be permanent. Consequently, a California resident who moves to the UK for a fixed-term assignment — retaining a California driving license, California bank accounts, and a California mailing address — has almost certainly not changed their California domicile and continues to owe California income tax on worldwide income for the duration of the UK stay. The California Franchise Tax Board domicile guidance is at https://www.ftb.ca.gov.
The Difference Between Resident and Non-Resident State Filing
Most states that impose income tax distinguish between resident filing — taxing all worldwide income — and non-resident filing — taxing only income sourced within the state. Furthermore, where a former state resident has genuinely changed domicile and established non-resident status, they typically continue to owe state income tax only on state-source income — salary from a state employer, rental income from state property, or business income from state operations. Additionally, many Americans in the UK continue to receive state-source income — US salary from a state-based employer, dividends from state-incorporated companies, or rental income from a retained US property — making non-resident state filing a continuing obligation even after a successful domicile change. Consequently, the US expat tax return must assess not only whether a state tax filing is required, but also whether the filing is as a resident or non-resident — since the two produce very different tax bases.
The Most Aggressive States
California: The Most Aggressive State
California is consistently the most aggressive US state in asserting continuing domicile over former residents who move abroad. Furthermore, the California Franchise Tax Board applies a facts-and-circumstances test that considers all ties maintained with California — including California bank accounts, California driver's licenses, California professional licenses, California vehicle registrations, California club memberships, and California property ownership. Additionally, California has a specific "safe harbor" for individuals who are outside California for an uninterrupted period of at least 546 days — approximately 18 months — under an employment contract, which provides some protection against California non-resident income tax for those on fixed-term assignments. Consequently, a US citizen who moves from California to the UK and returns to California after three years may receive a California tax bill, claiming they were a California resident throughout the period — particularly if they maintained any of the above ties during the absence. The California FTB guidance is at https://www.ftb.ca.gov.
New York: The Statutory Residency Trap
New York has a unique trap for former residents — the statutory residency rule, which treats individuals as New York residents if they maintain a permanent place of abode in New York and spend more than 183 days there during the tax year. Furthermore, a US citizen who retains a New York apartment — even where they genuinely intend to be UK-domiciled — and visits New York for more than 183 days during any tax year is treated as a New York statutory resident subject to New York state tax on all worldwide income for that year. Additionally, the 183-day count is based on New York presence during the calendar year, not just working days — a day in New York counts even if the individual is merely passing through. Consequently, the US expat tax return for any former New York resident who retains a New York property must specifically track New York day counts each calendar year to confirm whether the statutory residency test is triggered. The New York State Tax Department guidance is at https://www.tax.ny.gov.
States With No Income Tax
Nine US states impose no state income tax — Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, and Wyoming. Furthermore, Americans who were domiciled in one of these states before moving to the UK have no state income tax obligation — making the state dimension of the US expat tax return significantly simpler. Additionally, some Americans strategically change their domicile to a no-income-tax state immediately before moving to the UK — a planning step that can be effective when done correctly and with a genuine intention to establish the new domicile. Consequently, establishing Florida or Texas domicile before a move to the UK — by registering a Florida or Texas address, obtaining a Florida or Texas driving license, and spending time in that state — can permanently eliminate the state income tax dimension of the cross-border filing. The IRS has no involvement in state domicile planning — it is entirely a state tax matter.
How to Establish Non-Residency Before Moving to the UK
Step One: Take Affirmative Steps to Change Domicile
Establishing non-residency in a state requires affirmative action — not simply leaving. Furthermore, the steps that demonstrate a domicile change include: registering at a new address in a different state or internationally, obtaining a UK driving licence and surrendering the state license, changing bank accounts to UK institutions, updating professional and voter registrations, and filing a final part-year resident state return for the year of departure. Additionally, where the former state residence involved property ownership, selling or renting the property — rather than retaining it — removes a significant tie that states use to argue continuing domicile. Consequently, the US expat tax return preparation for the departure year should include a specific state domicile analysis — confirming which ties must be cut, which can be retained without risk, and what documentation should be assembled to support the domicile change claim if it is later challenged. The AICPA state tax guidance is at https://www.aicpa.org.
Step Two: File a Part-Year Resident Return for the Departure Year
In the year of moving to the UK, the former state requires a part-year resident return — reporting income earned while resident in the state and income sourced from the state after departure. Furthermore, the part-year resident return establishes the departure date and the income allocation — it is the formal record of the last period of state residence. Additionally, failing to file the part-year resident return creates an open issue with the state tax authority — since the state's records show a prior-year full-resident filing with no subsequent non-resident return, which may trigger an inquiry. Consequently, filing the part-year resident return for the departure year — even where the state tax due is modest after the departure date — is the essential administrative step that closes the state residency status cleanly.
Step Three: Monitor State-Source Income After Departure
After establishing non-residency, the US expat tax return must assess each year whether state-source income continues. Furthermore, state-source income for non-residents includes wages from an employer based in the state, rental income from state property, capital gains from real estate located in the state, and business income from operations conducted in the state. Additionally, the non-resident state filing obligation continues for every year in which state-source income exceeds the state's non-resident filing threshold — meaning that retaining a rental property in California or New York creates a continuing non-resident California or New York state tax filing obligation indefinitely. Consequently, advising on whether to retain or sell US property at the time of the UK move requires a specific state tax analysis — since the state tax cost of continued property ownership may be a significant factor in the decision.
Case Study: California Resident Moves to the UK
Our team was engaged by a US citizen who moved from San Francisco to London in March 2023. She had been a California resident for eight years, held a California driver's license, maintained a California Bank of America account, retained a California-based investment account, and had a lease on a San Francisco apartment that expired in April 2023. Furthermore, she earned a UK salary from her London employer starting in April 2023.
For the US expat tax return in 2023, we filed a California part-year resident return covering January to March 2023 — the period of California residence. Furthermore, we advised her to update her driving license to a UK license within the first year of UK residence, close the California bank account, and transfer the investment account to a UK platform. Additionally, we confirmed that she had no California-source income after April 2023 — the California apartment lease had ended, the employer was UK-based, and no California property or business interests remained. Consequently, no California non-resident filing was required for 2024 or subsequent years. The California FTB accepted the 2023 part-year filing without inquiry, and her California domicile was cleanly established as terminated as of March 2023.
Common State Tax Mistakes Americans in the UK Make
Not Filing the Part-Year Resident Return
The most common administrative failure is moving to the UK without filing a part-year resident state return for the departure year. Furthermore, this leaves an open status with the state — the last filed return was a full-year resident return, with no subsequent filing to indicate departure. The state may then issue a notice of assessment for subsequent years as a full-year resident. The correct approach requires filing the part-year resident return for the departure year, explicitly noting the departure date and the allocation of income between the resident and non-resident periods. State tax authority guidance varies — California's FTB guidance is at https://www.ftb.ca.gov.
Retaining State Ties That Maintain Domicile
Many Americans move to the UK but retain their state driving license, state bank account, and state voter registration — assuming these are administrative conveniences rather than legal risk. Furthermore, states use retained ties as evidence that the domicile change was not genuine — and a collection of retained ties can be used to argue that the individual remained state-domiciled throughout the UK absence. The correct approach requires systematically reviewing and cutting as many state ties as practicable before or shortly after departure — particularly the driver's license, bank accounts, and voter registration, which states give particular weight to. The New York State Tax Department guidance is at https://www.tax.ny.gov.
Triggering New York Statutory Residency
Former New York residents who retain a New York apartment and make extended visits to New York — for family, business, or social reasons — risk triggering the 183-day statutory residency rule in any year they exceed that threshold. Furthermore, the 183-day count is a hard threshold — 184 days in New York with a retained apartment produces a full-year New York resident tax liability on all worldwide income. The correct approach requires tracking New York days precisely in any year the threshold is at risk of being exceeded — and either limiting New York visits or relinquishing the New York property to avoid the statutory residency trap. The New York State Tax Department guidance is at https://www.tax.ny.gov.
How US-UK Tax Can Help
At US-UK Tax, our team of Enrolled Agents, Chartered Tax Advisers, and Certified Public Accountants prepares the complete US expat tax return, including state tax analysis for Americans moving to or living in the UK. Furthermore, we assess the state domicile position in the departure year, prepare the part-year resident state return, advise on which state ties to cut, monitor state-source income in subsequent years, and prepare non-resident state returns where continuing state-source income requires filing. Additionally, we advise on state domicile planning before the UK move for residents of high-tax states like California and New York.
Contact our team today. Email hello@us-uktax.com, call 0333-8807974, or visit https://www.us-uktax.com/contact/.
Conclusion
State income tax is the third dimension of the US expat tax return for Americans moving to the UK — and it is the one most commonly overlooked. Furthermore, moving to the UK does not automatically end state tax obligations — a domicile change requires affirmative action, and states like California and New York will challenge a claimed domicile change where the departing resident has maintained significant state ties. Moreover, the New York statutory residency rule creates a specific trap for former residents who retain New York property and visit the state for more than 183 days in any calendar year. Contact US-UK Tax at hello@us-uktax.com or call 0333-8807974 today.
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FAQs
Q: Do I still owe state income tax after moving to the UK?
A: Possibly. States like California and New York can assert continuing domicile where you maintain significant ties to the state — a state address, bank accounts, a driver's license, or property. Moving to the UK does not automatically change your domicile. Affirmative steps and a part-year resident return are required.
Q: What is the California safe harbour for UK residents?
A: Individuals outside California for at least 546 consecutive days under an employment contract may qualify for the California safe harbor — protection from California non-resident income tax during that period. The 546 days must be uninterrupted and under a contract of employment, not a general lifestyle choice.
Q: What is the New York statutory residency rule?
A: Anyone who maintains a permanent place of abode in New York and spends more than 183 days in New York during the tax year is treated as a New York statutory resident — subject to New York state tax on all worldwide income for that year, regardless of domicile elsewhere.
Q: Which US states have no state income tax?
A: Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, and Wyoming. Americans domiciled in these states before moving to the UK have no state income tax obligation and no state return to file — simplifying the cross-border return significantly.
Q: What is a part-year resident state return?
A: A state tax return that covers the period of state residence in a year of departure — reporting income earned while resident in the state and income sourced from the state after departure. Filing it establishes the departure date officially and closes the state residency status cleanly with the tax authority.
Q: Does retaining a US bank account affect state tax domicile?
A: Yes, it can. States use retained ties as evidence of continuing domicile — and a US bank account is one of the ties that California and New York give weight to in a domicile challenge. Closing state bank accounts and opening UK accounts is one of the recommended steps in establishing a genuine domicile change.
