Sent to America for work: the tax rules behind a US secondment

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

Your employer is sending you to New York for six months. Somebody mentions a 183-day rule, and the tax side seems settled. For many people on a US secondment it is not, because the rule carries conditions that payroll rarely checks.

Get the setup right and you may owe America nothing at federal level. Get it wrong and you pay tax from the first day. So this guide covers the treaty test, the state trap, National Insurance and the British side of the move.

Key takeaways

• America taxes wages for work physically done on its soil, wherever you live.
• The treaty exempts short stays only if all three of its conditions are met.
• A recharge of your salary to the US company can remove the exemption entirely.
• States do not follow the treaty, so state tax can apply from day one.
• A certificate of coverage keeps you in UK National Insurance for up to five years.

What is the 183-day rule, really?

It is a treaty exemption for employment income, and it has three conditions rather than one. You must be present in America for 183 days or fewer in any 12-month period. Your pay must come from an employer that is not a US resident. And a US branch must not bear the cost.

Fail any one condition and the exemption disappears, whatever your day count. Per the IRS tax treaty tables (opens in a new tab), each treaty sets its own employment conditions, and the UK version follows this three-part structure.

Everyone counts the days. The expensive mistakes come from not asking who pays the salary.

Why does a recharge matter so much?

Because a recharge moves the cost of your salary to the American company. Groups often bill the US subsidiary for the time you spend working there, which is sensible accounting. For the treaty, it can mean a US resident effectively pays you.

Once that happens, the second condition fails, and your US wages become taxable from the first day. A three-month project can then produce a full US filing duty. Ask your employer directly whether the cost of your US secondment will be recharged.

The answer usually sits with the finance team rather than HR. Get it in writing before you travel, because it decides the federal position far more than the day count does. A short email confirming the arrangement is enough.

Why do states ignore the treaty?

Because the treaty binds the federal government, and most states choose not to follow it. New York, California and many others tax wages for work done within their borders, regardless of any federal exemption. Short stays can still create a state return.

Some states charge no income tax at all, including Texas and Florida. The destination therefore shapes the cost of a US secondment as much as its length. Our guide to US state tax for expats explains how state rules work alongside the federal system.

When does a secondee become a US resident?

Once the substantial presence test is met. That test counts every day this year, a third of last year's days and a sixth of the year before. Cross 183 on that formula and America can treat you as resident, taxable on worldwide income.

According to the IRS guidance on the substantial presence test (opens in a new tab), part days count as full days. A longer placement usually produces a dual-status first year, split between resident and non-resident periods. The treaty tie-breaker can sometimes return you to UK residence.

What happens to National Insurance?

Usually nothing changes, provided you get the right certificate. The US UK totalisation agreement lets detached workers stay in their home social security system for up to five years. HMRC issues a certificate of coverage, which you give to the US employer.

With it, you keep paying National Insurance and avoid American social security tax on the same wages. Without it, both systems can charge at once. Per the GOV.UK guidance on National Insurance abroad (opens in a new tab), your employer applies before the posting starts. American social security and Medicare tax runs at 7.65% for the employee, matched by the employer, so the certificate saves real money on both sides.

What happens to your UK pension during the placement?

It usually carries on as normal. A secondee who stays in a UK workplace pension keeps contributing through UK payroll, and the certificate of coverage supports that arrangement. The treaty can also protect those contributions from US tax, subject to conditions.

Check the conditions if the placement runs long or you become a US resident. The protection has limits, and a long US secondment can push contributions outside them.

Allowances and benefits

Housing, school fees, cost-of-living payments and home leave flights usually form part of a secondment package. America generally taxes all of them as wages once your US pay is taxable. A monthly housing allowance of $5,000 can add $60,000 a year to US taxable income.

Britain treats several of these differently, and some temporary workplace costs qualify for relief. So the same package can produce very different taxable figures in each country, which is exactly why tax equalisation policies exist. Ask for the equalisation policy in writing, and read how it treats bonuses and share awards.

Family and visas

A spouse who joins you may need their own tax filing if they work in America, and many dependent visas restrict work anyway. Schooling costs are rarely deductible on either side. Check their position before they accept any American work, because it can create filings of its own in both countries.

Immigration and tax run on separate tracks. An L-1 visa authorises the work but decides nothing about tax, so treat the two conversations separately from the start.

How do you plan a US secondment properly?

Most of the useful decisions happen before the flight, while the contract and payroll arrangements can still change. A US secondment agreed in a hurry usually skips half of these. Work through them with your employer, in this order:

1. Confirm the expected length and whether it could extend.
2. Ask whether the cost of your salary will be recharged to a US company.
3. Check the income tax rules of the state where you will work.
4. Apply for a certificate of coverage before the posting begins.
5. Keep a daily log of US days, counting part days as full days.
6. Check whether your employer runs tax equalisation or shadow payroll.
7. Plan the UK residence position for the tax years the placement spans.

A worked example

Take an illustrative example. A consultant from Manchester spends five months on a US secondment in Manhattan in 2025. His UK employer pays his £8,000 monthly salary, and nothing is recharged to the American office.

He meets all three treaty conditions, so his federal wages are exempt. New York, however, taxes the salary for the days he worked there, so he files a state return. His certificate of coverage keeps him in UK National Insurance.

Britain still taxes his full salary as a UK resident, and he claims credit for the New York tax on the same wages. Had his employer recharged the cost, he would also have faced federal tax on every New York workday. The credit leaves him with no extra UK tax on those wages.

What does Britain expect during the placement?

Short placements rarely change your UK residence, so HMRC keeps taxing your worldwide income. You claim credit for any American tax on the same wages. Our guide to the UK statutory residence test explains how HMRC counts your days.

Longer placements can make you non-resident. Full-time work abroad for a whole tax year, with limited UK days, can end UK residence and bring split-year treatment. That changes which country taxes what, so plan it deliberately.

Travel and subsistence costs deserve a look too. Where a secondment is expected to last 24 months or less, UK relief for travel to a temporary workplace may apply.

What happens when the secondment ends?

You file a final US return covering the placement, plus a state return where one applies. If you became resident, the final year is usually dual-status, split at the date you left. Keep your departure evidence with the return.

Check for refunds too. Shadow payroll often over-withholds in the final year, and the last return is the only place to recover it. A final state return can produce a refund for the same reason.

Mistakes and traps on a US secondment

These problems appear constantly, and most come from treating the 183-day rule as the whole story:

• Counting days while ignoring who bears the cost of the salary.
• Assuming the treaty exemption also covers state income tax.
• Starting work before the certificate of coverage arrives.
• Letting a placement extend past 183 days without reviewing the position.
• Forgetting that part days in America count as full days.
• Missing the credit for US tax on the UK return.

Employers carry obligations of their own, including US withholding and reporting where wages become taxable. Getting the employee and employer sides aligned early saves both from correcting returns later.

How US UK Tax Accountants helps

We review the placement before it starts, test the treaty conditions, and prepare the returns on both sides. Our 183-day and US residence service covers the day count and the treaty, and our treaty relief service handles the credits.

In our practice the recharge question is where most of the value sits. We agree a fixed fee in writing before any work starts, for employees and employers alike.

Plan before the flight

If a US secondment is on the table, a short review now protects the treaty position before the contract is signed. Tell us the length, the state and who pays the salary. You can book a consultation and hear back within one working day.

Last reviewed 14 September 2026 by the US UK Tax Accountants Tax Team. This article is general information, not personal tax advice — speak to a qualified US/UK tax adviser about your own position.

For the neighbouring question, Locum doctors and travel nurses: what crossing the Atlantic does to your tax walks through it in detail.