Your salary has a geography, and your diary is the evidence

Figures relate to tax year 2025-26 (UK) · 2025 (US)

You get paid monthly by one employer into one account. Nothing about the money suggests it belongs to two countries.

Then you spend six weeks on a project in Chicago and the picture changes. Part of that salary now has an American source.

Income apportionment is how both systems divide a single wage between them. It runs on workdays rather than money, and the diary becomes the most valuable document you own.

Key takeaways

• Employment income is sourced where the duties happen.
• Income apportionment divides pay by workdays, not calendar days.
• Leave, weekends and sick days generally drop out of the count.
• Bonuses follow the period they were earned over, not paid in.
• Share awards apportion across the whole vesting period.
• New arrivals in Britain have a relief with a cap from April 2025.
• A contemporaneous diary beats any later reconstruction.

What is income apportionment?

Dividing one salary between countries according to where the work was physically done. Each country taxes the slice earned on its soil, subject to treaty relief. According to IRS guidance on sourcing personal service income, the usual method compares days worked in a country against total workdays.

So the income apportionment formula is simple, while the inputs are not.

Almost every dispute is about which days count rather than about the arithmetic.

Which days count as workdays?

Days on which you actually performed duties, which excludes weekends, public holidays, annual leave and sickness in most cases. A typical year produces somewhere around 230 to 240 workdays. Travel days usually count where any work happened on them.

A weekend spent answering email is a grey area rather than a clear workday.

Still, be consistent, because inconsistency in an income apportionment is what draws questions.

A worked example

Take an illustrative example. An American lives in London, works for a British employer and spends 40 workdays in America during 2025.

Her total workdays come to 230 and her salary is £120,000. Roughly 17 per cent of that has an American source.

That slice falls outside the foreign earned income exclusion, because the exclusion only covers work performed abroad. So the income apportionment decides how much relief survives. It can still attract a credit for any British tax on it.

The remaining 190 days of income stay foreign earned and qualify for the exclusion in the normal way.

How each system approaches it

Does the treaty override the split?

Sometimes, where a short visit meets the conditions. Employment income can stay taxable only in your country of residence if the visit is brief, the employer is not local and no permanent establishment bears the cost. All three conditions have to hold together.

However, a long secondment fails the first condition immediately, and income apportionment then applies as usual.

Our guide to US secondment tax covers assignment structures.

What happens to a bonus?

It follows the period it rewards rather than the month it lands. A bonus for 2024 performance paid in March 2025 apportions across 2024 workdays. People get this wrong constantly, because payroll shows it in a single month.

Keep the bonus letter, since it usually states the period covered.

Without it the default assumption is the year of payment, which may not help you.

How do share awards apportion?

Across the whole vesting period, counting workdays in each country throughout. An award granted in 2022 and vesting in 2025 looks at three years of movement. That makes long dated equity the hardest item in any income apportionment exercise.

Our guide to share schemes across both systems covers the timing.

Start the day count at grant rather than reconstructing it at vest.

What is overseas workday relief?

A British relief for qualifying new arrivals, exempting the portion of earnings relating to duties performed outside Britain. From April 2025 it runs for four years with a cap. That cap sits at the lower of 30 per cent of qualifying employment income or £300,000 a year.

The money no longer needs keeping offshore, which removed an old administrative trap.

Our guide to the FIG regime for arriving Americans covers the wider reform.

Does your employer handle any of this?

Partly, through payroll arrangements that apply an income apportionment to the deductions. British employers can notify HMRC and operate deductions on the British portion only. Nothing similar happens automatically for the American side.

Our guide to shadow payroll arrangements covers how employers manage it.

Even with payroll help, the final split appears on your own returns.

What if you work remotely from both?

The same income apportionment applies, which catches people who think remote work is location neutral. A fortnight working from a relative's house in Florida produces American source income. The employer's location changes nothing about where your feet were.

Our guide to working remotely for a US employer covers the wider position.

In our practice remote days cause more surprises than business trips do.

Do state taxes follow the same split?

States run their own rules, and several are aggressive about days spent inside them. New York in particular taxes non-residents on income from days worked there. A week of meetings can create a state filing obligation on its own.

Our guide to state tax for expats covers the problem states.

Count state days separately from federal ones.

Does the direction of travel matter?

Not to the formula, but it changes which relief you reach for. An American in Britain travelling to America loses exclusion on those days, while a British arrival travelling out may gain relief on them. The same day count drives both answers.

So run the count first and pick the relief afterwards.

In practice most people do it the other way round and lose money.

What about a sign on payment?

It usually follows the period it is meant to secure, which is often the first year of service. Where the payment compensates for something you gave up, the analysis can point back to the previous employment instead.

Read the clause rather than assuming it belongs to the year of receipt.

Termination payments raise the same question in reverse.

Does a company car or benefit apportion too?

Yes, because benefits form part of employment income like salary. A car benefit or medical cover divides on the same workday basis. Relocation benefits are the exception, since they often attach to a single event rather than a period.

Our guide to benefits in kind and US tax covers the valuation side.

Add the benefit figures to the salary before applying the fraction.

How precise does the count need to be?

Precise enough to defend, which means day level rather than week level. Rounding a six week trip to a month shifts real money when the salary is large. Both authorities accept a reasonable method applied consistently.

What neither accepts is a different method each year.

Pick an approach, write it down, and keep using it.

What records does income apportionment need?

A day by day record showing where you were and whether you worked. Calendar entries, boarding passes, hotel bills and card transactions all corroborate it. The record needs making as you go rather than at the end of the year.

A simple spreadsheet updated weekly is enough.

Reconstructions from memory are the weakest evidence there is.

What if your employer disputes the figures?

Then your return reflects your facts rather than the payroll system's assumptions. Payroll often applies a standard split agreed at the start of an assignment. Where your actual travel differed, you report what happened and keep the evidence.

Tell the employer, because their records should match.

Mismatches between payroll and a return invite questions on both sides.

Does the split change your social security?

Not directly, because contributions follow a separate agreement between the two countries, rather than any income apportionment. A certificate keeps you in one system while working temporarily in the other. The income split for tax does not disturb that arrangement.

Our guide to the certificate of coverage covers how to get one.

Apply before the assignment rather than afterwards.

What about a part year move?

Then residence itself changes partway through, which layers a second question on top. British split year treatment and the American residence rules both apply on their own terms. Income apportionment then operates inside each period separately.

Fix the residence dates before touching the day count.

Doing it the other way round produces answers nobody can reconcile.

What if two employers are involved?

Then each employment apportions on its own figures, because the duties and the periods differ. Changing jobs midway through a year gives you two separate counts rather than one blended figure. The totals rarely add up to a tidy percentage.

Keep the leaving date and the start date with the diary.

A gap between them is neither workdays nor leave, and it simply drops out.

How long should you keep the records?

Six years at least, and longer where share awards stretch across several of them. So keep them even after a job ends. An award vesting in 2028 may need day counts from 2024 onwards.

Keep the diary file with the tax papers rather than on a work laptop.

People lose the evidence when they change employer.

How to apportion your income

1. Record every day you worked and the country you worked in.
2. Exclude leave, weekends and sickness from the workday total.
3. Divide country days by total workdays to get each share.
4. Check whether a short visit qualifies for treaty protection.
5. Apportion bonuses over the period they reward.
6. Track share awards from grant rather than from vest.
7. Run the state day count separately from the federal one.
8. Reconcile your income apportionment with payroll before filing.

Mistakes and penalties we see with income apportionment

The first is counting calendar days rather than workdays. That understates every share materially.

The second is apportioning a bonus to the year it was paid. The period earned governs instead.

The third is ignoring remote days spent abroad, which create source income just as business trips do.

The fourth is reconstructing a diary at the end of the year, which is the weakest evidence available.

How US UK Tax Accountants helps

We build the day count with clients at the start of a year rather than the end, because that single record drives everything else. Then we apply it consistently across salary, bonus and equity.

Where payroll has assumed a different split, we reconcile the two before filing. Our treaty relief service covers the positions that reduce double taxation.

If you are about to start splitting your time between both countries, get in touch before the first trip.

Last reviewed 16 October 2026. This article is general information and not personal tax advice. Assignments differ, so take advice on your own arrangement.