🗽 COUNTRY A New York VS 🇬🇧 COUNTRY B UK

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.