U.S. citizen in the UK: married to a non-u.s. spouse, filing separately, california, ties cut
Combined marginal rate across this income: 39.0%. Rates are 2026 marginal rates after treaty credits, as an upper bound.
- Residence
- United Kingdom, 1 full year(s)
- U.S. filing status
- Married filing separately
- Income (all sources)
- 99,500 GBP ≈ $132,335
- U.S. ordinary marginal rate
- 24%
- U.S. qualified rate
- 15%
- NIIT exposed
- yes
- U.S. state
- California (ties cut)
- UK band
- higher
- UK marginal rate
- 40%
- FIG window
- yes, year 2 of 4
| Income | Amount | U.S. | State | UK | Who taxes | Combined |
|---|---|---|---|---|---|---|
| Salary | £90,000 | 24% | — | 40% | Residence first, U.S. credits | 40% |
| Bank interest (local) | £500 | 24% | — | 40% | Residence first, U.S. credits | 43.8% incl. NIIT |
| Dividends from U.S. companies | £1,500 | 15% | — | — | U.S. first, residence credits | 18.8% incl. NIIT |
| Dividends from local companies | £1,500 | 15% | — | 35.8% | Residence first, U.S. credits | 39.5% incl. NIIT |
| Gains on shares sold | £6,000 | 15% | — | 24% | Residence first, U.S. credits | 27.8% incl. NIIT |
Why each income is taxed this way
Salary · 40% · Taxed where you work; the U.S. credits that tax (FTC). The FEIE is the alternative.
- U.S.: Ordinary income, marginal 24%
- State: California: ties cut, not a resident
- UK: Income tax, marginal 40% · social contributions: National Insurance 8% / 2%
- Excess foreign credit carries forward 10 years (same category only).
US.WORLDWIDE · US.ORDINARY.2026 · US.STACKING · STATE.TIESCUT · STATE.STICKY · GB.INCOME.2026 · GB.NI · US-GB.SAVING · US-GB.ART24 · US.FTC · US.FEIE.2026
Bank interest (local) · 43.8% · UK taxes first; the U.S. credits UK tax.
- U.S.: Ordinary income, marginal 24%
- State: California: ties cut, not a resident
- UK: Savings at 40% after the Personal Savings Allowance
- 3.8% NIIT on top: no foreign credit allowed.
- Excess foreign credit carries forward 10 years (same category only).
US.WORLDWIDE · US.ORDINARY.2026 · STATE.TIESCUT · STATE.STICKY · GB.INCOME.2026 · GB.SAVINGS · US-GB.ART24 · US.FTC
Dividends from U.S. companies · 18.8% · U.S. taxes first (15%); the UK credits it; the U.S. credits UK tax above 15%.
- U.S.: Qualified dividends 15%
- State: California: ties cut, not a resident
- UK: FIG regime, year 2 of 4: foreign income exempt
- 3.8% NIIT on top: no foreign credit allowed.
US.WORLDWIDE · US.QUALIFIED.2026 · STATE.TIESCUT · STATE.STICKY · GB.FIG · US-GB.ART24 · US.FTC
Dividends from local companies · 39.5% · UK taxes first; the U.S. credits UK tax.
- U.S.: Qualified dividends 15%
- State: California: ties cut, not a resident
- UK: Dividend tax 35.75% above £500
- 3.8% NIIT on top: no foreign credit allowed.
- Excess foreign credit carries forward 10 years (same category only).
US.WORLDWIDE · US.QUALIFIED.2026 · STATE.TIESCUT · STATE.STICKY · GB.DIVIDENDS.2026 · US-GB.ART24 · US.FTC
Gains on shares sold · 27.8% · UK taxes first; the U.S. credits UK tax.
- U.S.: Long-term gains 15%
- State: California: ties cut, not a resident
- UK: CGT 24% above £3,000 (non-UK shares exempt during FIG)
- 3.8% NIIT on top: no foreign credit allowed.
- Excess foreign credit carries forward 10 years (same category only).
US.WORLDWIDE · US.QUALIFIED.2026 · STATE.TIESCUT · STATE.STICKY · GB.CGT.2026 · GB.FIG · US-GB.ART24 · US.FTC
Forms to file
| IRS | Form 1040 | Every year, wherever you live (June 15 for filers abroad). |
| IRS | Form 1116 | Credit for French/UK tax, by category (general, passive). |
| IRS | Form 8960 | Net Investment Income Tax. |
| IRS | FinCEN 114 (FBAR) | Foreign accounts ≈ $159,600, above $10,000. |
| HMRC | SA100 | Self Assessment: income not fully taxed through PAYE (register by 5 October). |
| HMRC | SA100 | Supplementary page. |
| HMRC | SA108 | Capital gains above the thresholds. |
| HMRC | SA109 | Residence status and FIG claim. |
Watch out for
3.8% NIIT on investment income
Your income is above the threshold. Foreign tax cannot offset it (Federal Circuit, August 2026).
California is a sticky state
California presumes you remain domiciled unless you clearly cut ties, and gives no credit for foreign tax. Keep evidence that you left (closed licence, voter registration, no home).
Non-U.S. spouse
Filing separately keeps your spouse's income and accounts out of the U.S. system; joint filing needs an election and brings in their worldwide income.
One social security system
Totalization agreements mean you pay social contributions where you work, not U.S. FICA or self-employment tax (keep a certificate of coverage if self-employed).
FIG regime: year 2 of 4
Foreign (non-UK) income and gains can be exempt from UK tax if you claim; the U.S. still taxes them. Claiming costs your personal allowance and CGT allowance.
Rule trace (22 rules)
- US.WORLDWIDE — Citizenship-based taxation. U.S. citizens and green-card holders report worldwide income every year, wherever they live. (high, checked 2026-11-15 · IRS — U.S. citizens and resident aliens abroad (official))
- US.ORDINARY.2026 — 2026 ordinary income brackets. 10% to 37%. Single: 22% from $50,401, 24% from $105,701, 32% from $201,776. Joint: 22% from $100,801. (high, checked 2026-11-15 · IRS — Rev. Proc. 2025-32 (inflation adjustments for 2026) (official) · Tax Foundation — 2026 brackets (Rev. Proc. 2025-32))
- US.STACKING — FEIE stacking rule. Income excluded with the FEIE still sets the rate on the rest of your income. (medium, checked 2026-11-15 · 26 U.S.C. §911 — foreign earned income exclusion, stacking in (f) (official))
- STATE.TIESCUT — No state tax after cutting ties. Once domicile is clearly moved abroad, most states stop taxing you. Xpat's reading Xpat's reading: Xpat assumes no state tax once you say ties are cut; a state may still disagree. (medium, checked 2026-11-15 · Tax Foundation — state income tax rates 2026)
- STATE.STICKY — Sticky states. California, Virginia, New Mexico and South Carolina are known for treating former residents as still domiciled. Xpat's reading Xpat's reading: A practitioner's shortlist, not a legal category: these states audit departures more often. (medium, checked 2026-11-15)
- GB.INCOME.2026 — UK income tax 2026/27. 20% to £50,270, 40% to £125,140, then 45%. The £12,570 allowance is withdrawn between £100,000 and £125,140 (60% effective). (high, checked 2026-11-15 · GOV.UK — Income Tax rates and Personal Allowances (official))
- GB.NI — National Insurance. Employees pay 8% to £50,270 and 2% above; self-employed Class 4 6% / 2%. (medium, checked 2026-11-15 · GOV.UK — National Insurance rates and categories (official) · GOV.UK — Self-employed National Insurance rates (official))
- US-GB.SAVING — Saving clause. The U.S. taxes its citizens regardless of the treaty; Article 24 decides who credits whom. (medium, checked 2026-11-15 · IRS — U.S. income tax treaties A to Z (U.K. convention of 2001 and technical explanation) (official) · US citizens in the UK — treaty credit order)
- US-GB.ART24 — Article 24: credit order. UK-source income: UK taxes first, U.S. credits. U.S. dividends: U.S. taxes first up to 15%, UK credits, U.S. credits UK tax above it. (medium, checked 2026-11-15 · IRS — U.S. income tax treaties A to Z (U.K. convention of 2001 and technical explanation) (official) · US citizens in the UK — treaty credit order)
- US.FTC — Foreign Tax Credit. Foreign income tax on foreign-source income is credited against U.S. tax (Form 1116), by category (general, passive). Excess credits carry forward 10 years. (high, checked 2026-11-15 · 26 U.S.C. §901 — foreign tax credit (official) · IRS — Instructions for Form 1116 (Foreign Tax Credit) (official))
- US.FEIE.2026 — Foreign Earned Income Exclusion. Up to $132,900 of foreign wages or self-employment income excluded in 2026 (Form 2555). Not available for pensions or investment income. (high, checked 2026-11-15 · IRS — Rev. Proc. 2025-32 (inflation adjustments for 2026) (official) · IRS — Instructions for Form 2555 (Foreign Earned Income) (official))
- GB.SAVINGS — Savings income. Taxed at your band rate after the Personal Savings Allowance (£1,000 basic, £500 higher, £0 additional). Rates rise 2 points from April 2027. (medium, checked 2026-11-15 · GOV.UK — Tax on savings interest (official) · GOV.UK — Changes to tax rates for property, savings and dividend income (policy paper) (official))
- US.NIIT — Net Investment Income Tax. 3.8% on interest, dividends, gains and rent when MAGI exceeds $200,000 single / $250,000 joint / $125,000 separate. Wages, pensions and Social Security are not investment income. (high, checked 2026-11-15 · 26 U.S.C. §1411 — net investment income tax (official))
- US.NIIT.NOCREDIT — No foreign tax credit against NIIT. Federal Circuit, Aug 31 2026 (Bruyea, Christensen): treaty credits cannot reduce the NIIT, including under the French treaty. Further review may still be possible, so review any treaty-based position with an adviser. Contested Xpat's reading: Xpat applies the Federal Circuit decisions: the 3.8% is added on top and never credited. The Court of Federal Claims had ruled the other way, and further review may still be sought. (high, checked 2026-11-15 · Fed. Cir. — Estate of Bruyea v. United States, No. 2025-1563 (Aug. 31, 2026) (official) · EY — Federal Circuit: no FTC against NIIT (Aug 2026) · RSM — Christensen and Bruyea reversed: what taxpayers abroad should do (Nov 2026))
- US.QUALIFIED.2026 — Qualified dividends and long-term gains. 0% / 15% / 20%. Single: 15% from $49,451, 20% from $545,501. Joint: 15% from $98,901, 20% from $613,701. (high, checked 2026-11-15 · IRS — Rev. Proc. 2025-32 (inflation adjustments for 2026) (official) · 26 U.S.C. §1 — tax rates, including capital gains rates in (h) (official))
- GB.FIG — 4-year FIG regime. New residents (no UK residence in the prior 10 years) can exempt foreign income and gains for 4 tax years, at the cost of the personal allowance and CGT allowance. (high, checked 2026-11-15 · GOV.UK — Check if you can claim the 4-year foreign income and gains regime (official) · GOV.UK — HS266 Foreign income and gains (FIG) regime (2026) (official) · Mishcon de Reya — What is the FIG regime?)
- GB.DIVIDENDS.2026 — UK dividend tax 2026/27. 10.75% / 35.75% / 39.35% above a £500 allowance. (high, checked 2026-11-15 · GOV.UK — Tax on dividends (official) · GOV.UK — Changes to tax rates for property, savings and dividend income (policy paper) (official))
- GB.CGT.2026 — UK CGT. 18% / 24% above £3,000. (high, checked 2026-11-15 · GOV.UK — Capital Gains Tax rates (official))
- US.FBAR — FBAR (FinCEN 114). Foreign financial accounts above $10,000 in total at any time. (high, checked 2026-11-15 · FinCEN — Report of Foreign Bank and Financial Accounts (FBAR) (official))
- GB.SA — Self Assessment. A return is needed for income not fully taxed through PAYE (foreign income, rent, self-employment, gains above the thresholds) and to claim FIG. Since 2024/25, high PAYE-only income alone no longer requires one. Register by 5 October, file online by 31 January. (high, checked 2026-11-15 · GOV.UK — Check if you need to send a Self Assessment tax return (official))
- US.NRA.SPOUSE — Non-U.S. spouse. Married to a non-U.S. person: file separately, or elect to treat the spouse as resident and bring their worldwide income in. (high, checked 2026-11-15 · 26 U.S.C. §6013 — joint returns, election for a nonresident spouse in (g) (official))
- US.TOTALIZATION — Social security totalization. The U.S. has agreements with France and the UK: you pay into one system only (usually where you work). (high, checked 2026-11-15 · SSA — International social security agreements (official))