Two calendars that refuse to line up

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

The UK tax year runs from 6 April to 5 April. The American one runs from 1 January to 31 December, and those two facts cause more trouble than any rule in the treaty.

That is the whole problem, and it is the most underestimated difficulty in filing in both countries.

Nothing about it is complicated. But no British figure ever arrives in an American shape.

Key takeaways

• Britain runs 6 April to 5 April, America 1 January to 31 December.
• No British document matches an American reporting period.
• You apportion British income across two American years.
• The foreign tax credit has to follow the same split.
• A January balancing payment relates to an earlier British year.
• Most credit errors we see come from the timing, not the maths.
• Monthly payslips are what make apportionment possible.
• Keeping a running record saves hours every April.

When does the UK tax year run?

From 6 April to the following 5 April, so 2025-26 means April 2025 to April 2026. According to GOV.UK guidance on Self Assessment deadlines, the return for that year falls due the next January, and the personal allowance of £12,570 is measured over exactly that window.

Our guide to registering for Self Assessment covers the British return.

Companies can choose their own year end, but individuals cannot.

Why does the UK tax year start in April?

A calendar change in the eighteenth century. When Britain moved to the Gregorian calendar the year was shortened, so the Treasury pushed its year end forward and lost no revenue. Then the date survived every reform since.

It is an accident of history rather than a design choice.

Ireland abandoned the same date in 2002, and Britain did not.

How does the American year differ?

It follows the calendar, from 1 January to 31 December, with the return due in April. According to IRS guidance on when to file, somebody living abroad gets an automatic extension to June. So the two filing seasons sit four months apart as well.

Our guide to US tax deadlines for expats covers the dates.

Both countries want a return about the same income.

The two calendars side by side

What does the gap actually break?

The foreign tax credit, mostly. You claim credit for British tax on the American return covering the same income, and British tax arrives in British year shapes. Matching one to the other is where almost every expat return goes slightly wrong.

Our guide to Form 1116 income baskets covers the credit.

In our practice this is the commonest error of all.

How do you split a UK tax year?

By apportioning income and tax across the two American years it touches. For example, the British year to April 2026 covers nine months of the American 2025 year and three months of 2026. So you allocate on a sensible basis, then apply it consistently.

Our guide to apportioning UK employment income covers the method.

Monthly payslips make this straightforward rather than approximate.

Can you just use the P60?

Not directly, because it reports a British year that no American return covers. Still, it is the best check on your total, so use it to verify figures you built from payslips. In short, treat it as a control rather than a source.

Our guide to your P60 and the US return covers the certificate.

Twelve payslips beat one annual summary every time.

A worked example

Take an illustrative case. An American in Leeds earns an even salary and pays British tax through payroll all year.

Her British year to April 2026 shows one total and one tax figure.

Her American 2025 return needs the January to December slice, which is three months from one British year and nine from the next.

Done from payslips the split takes ten minutes, and done from the P60 alone it is guesswork.

What about the January balancing payment?

It relates to a British year that ended the previous April, so it belongs with that income rather than with the year you paid it. People routinely credit it against the wrong American year, which overstates one year and understates another.

Our guide to payments on account covers the January bill.

Ask which year the payment relates to, not when it left your account.

Paid or accrued, which should you choose?

The accrued basis usually suits expats better, because it matches tax to the income that generated it rather than to the date it was paid. The paid basis is simpler and creates exactly the timing mismatch this article describes.

Our guide to foreign tax credit carryovers covers unused credit.

Changing basis later needs permission, so choose deliberately.

Does the exclusion have the same problem?

Yes, and it is slightly worse. The earnings exclusion is measured against the American calendar year while your qualifying period runs on its own dates, so three separate periods end up in play on one return.

Our guide to Form 2555 and the exclusion covers the claim.

Count the days on a calendar rather than from memory.

Does the UK tax year affect your residence?

It defines the period the British residence tests are applied to, which is a different window from the American one. So you can be British resident for a year that straddles two American years with different answers in each.

Our guide to the statutory residence test covers the tests.

Arrivals and departures make this acute.

What about capital gains?

A disposal has a single date, so there is no apportionment, only allocation. The gain falls into whichever British year and whichever American year contains that date. But for a sale in early April those two can differ.

Our guide to the 60-day CGT report covers property disposals.

Early April sales deserve particular care.

Does it matter for pensions?

It does, because British allowances are measured over a British year while American reporting follows the calendar. A contribution made in March sits in one British year and the following American one is not affected at all.

Our guide to employer pension contributions covers the treatment.

Allowance planning follows April, not December.

Can you align the two years?

No, and nobody has found a way round it. Neither country lets an individual choose a different year end, so the mismatch is permanent and the work is simply part of filing in both places. Accepting that early saves a lot of frustration.

Our guide to choosing a US-UK tax accountant covers who handles both.

Anybody promising to align them is misunderstanding the question.

What records make it painless?

Monthly payslips, a note of every tax payment with the year it relates to, and bank statements in date order. Those three turn an afternoon of reconstruction into a short calculation. Most people already have them and never file them usefully.

Our guide to exchange rates on a US return covers converting the figures.

Save each payslip the month it arrives.

Which exchange rate applies?

A rate appropriate to when the income arose, which for monthly pay means a monthly rate rather than one annual average. The mismatch in years makes an annual average particularly unhelpful, because it averages the wrong twelve months.

Our guide to currency gains on UK bank accounts covers the related issue.

Be consistent year to year whichever method you pick.

Does self-employment change it?

The same split applies, with accounting dates adding another layer. A sole trader with a 5 April accounting date still files an American return for the calendar year, so the accounts need reworking rather than copying across.

Our guide to UK contractors with US clients covers freelance work.

Keep the bookkeeping by month, not by British year.

What happens in the year you move?

Both mismatches arrive at once, because the British year may be split by the move and the American one is not. That is the hardest filing year anybody has, and it is the one most often done wrong by a preparer who sees only one side.

Our guide to split year treatment covers the British side.

Get the first year right and the rest follow.

Does HMRC accept American figures?

You convert the other way for the British return, allocating American income into the British year. The principle is identical and the direction reverses. Anybody with income from both countries does the exercise twice.

Our guide to Scottish income tax and the US credit covers a further variation.

Two returns, two shapes, one underlying set of facts.

Does the UK tax year change the figures you owe?

No, only when each country sees them. The same salary is taxed once by Britain and once by America, with a credit stopping the double charge. So the gap moves income between returns without creating or removing any liability.

Our guide to the US-UK tax treaty covers the relief.

In short, it is a timing problem rather than a cost.

Why do preparers get it wrong?

Usually because they only see one side. An American preparer handed a P60 reads it as an annual wage statement, which is exactly what it looks like. Then nine months of one year and three of another go onto a single return.

Our guide to the IRS online account covers a related point.

Ask whoever files for you how they handled the split.

Does it affect your UK tax code?

The code runs on the British year, so it resets every April rather than every January. That is why a code issued in February can look wrong against your American numbers. The two are simply measuring different periods.

Our guide to PAYE coding notices covers the code.

Check the code in April, when the new year starts.

What about a bonus paid in March?

It falls near the end of a British year and in the middle of an American one, so it lands in different places on each return. A March bonus is therefore the single item most likely to be double counted or missed entirely.

Our guide to UK bonus payments and US tax covers the treatment.

Flag March and early April payments every year.

Does the mismatch create extra tax?

It can, where credit falls in a year with nothing to set it against. Credit that cannot be used carries forward or back, but a badly timed split can strand it for years. That is a real cost arising purely from the calendar.

Our guide to Form 8938 reporting covers a related point.

Better timing beats a carryover you may never use.

How long does the reconciliation take?

An hour with monthly records and most of a day without them. The work itself is simple arithmetic, so the time goes entirely on finding documents. That is why keeping payslips as they arrive is worth more than any software.

Our guide to requesting a tax transcript covers the American record.

Set up a folder per tax year in both shapes.

Does the UK tax year matter for FBAR?

No, and that is a relief. The account report follows the American calendar year like the return does, so you take the highest balance between January and December. Nothing in that filing uses a British period at all.

Our guide to FBAR signature authority covers the account rules.

One fewer thing to reconcile, for once.

Does the UK tax year affect child benefit?

The high income charge is measured over the British year, so it uses April to April income. Your American return uses the calendar year, which means the same household can look over the threshold in one country and under it in the other.

Our guide to the high income child benefit charge covers the charge.

Model it on British dates, because that is what HMRC bills on.

What if your employer reports both?

Some international employers issue a calendar year statement alongside the British one, which saves real work. Ask whether yours can, because the payroll already holds the figures. Most will produce one if somebody asks.

Our guide to shadow payroll arrangements covers dual reporting.

It costs them a report and saves you an afternoon.

How to reconcile the UK tax year

1. Collect twelve monthly payslips rather than one annual certificate.
2. Convert each month at a rate appropriate to that month.
3. Allocate January to December into the American year.
4. Allocate 6 April to 5 April into the British year.
5. Identify which British year each tax payment relates to.
6. Decide between the paid and accrued basis and stick to it.
7. Check your totals against the P60 as a control.
8. Keep the working papers with both returns.

Mistakes and penalties we see with the UK tax year

The first is dropping P60 figures straight onto an American return, which reports nine months of one year and three of another as though they were twelve.

The second is crediting a January balancing payment against the year it was paid rather than the year it relates to.

The third is using one annual exchange rate across a period that spans two British years.

The fourth is switching between the paid and accrued basis from year to year, which eventually produces a credit nobody can reconcile.

How US UK Tax Accountants helps

We build both returns from the same monthly working papers, because that is the only way the two shapes ever agree with each other.

Then we tie each tax payment to the year it belongs to. Our US federal returns service covers the American side.

If your credit has never quite reconciled, get in touch.

Last reviewed 29 October 2026. This article is general information and not personal tax advice, and apportionment depends on your own records.