Is the UK or US a lower-tax country?

Federal-only, the US is significantly lower at most working incomes — its standard deduction ($16,100 single, 2026) and 10–12% lower brackets beat the UK's 20% basic rate + 8% NI from £12,571. At £100,000 gross, UK take-home is £68,557 (effective 31.4%) vs US federal-only £79,180 (effective 20.8%). Adding US state tax (0–13.3%): the US still leads in TX/FL/NV/WA but the gap narrows in CA/NY/NJ. The UK 60% effective marginal trap (£100k–£125,140 PA taper) is brutal.

How does a UK workplace pension compare to a US 401(k)?

UK auto-enrolment is 8% combined (3% employer + 5% employee, automatic for £10k+ earners), with full marginal-rate tax relief. US 401(k) is voluntary — typical employer match 50% on first 6% (3% effective). 2026 401(k) limit $23,500 employee + $7,500 catch-up at 50+. Both reduce taxable income; both are taxed at marginal rate on withdrawal. UK pension access age is 55 (rising to 57 from 2028); US 401(k) penalty-free at 59½. UK 25% lump-sum tax-free is unique.

If I move from the UK to the US, what happens to my tax residency?

US residency triggers via the Substantial Presence Test (31+ days current year, 183+ weighted across 3 years) or green card receipt. UK residency ends per the SRT — typically when you leave for full-time work overseas (the 'leaver' tests). The UK-US tax treaty provides foreign tax credits and pension recognition. Note: if you're a US citizen returning, you've been taxed on UK income all along.

Can I transfer my UK pension to a US 401(k)?

Generally no — UK pensions cannot be transferred to a US 401(k) or IRA. They stay in the UK, treaty-recognized as US pensions for tax-deferred growth while you're a US resident. Withdrawals are taxed at marginal rate on the US return; the UK 25% lump-sum is NOT tax-free under US rules — taxed as ordinary income. Transfers from US 401(k)/IRA to UK QROPS schemes attract a 25% UK Overseas Transfer Charge in most cases.

Is sales tax / VAT different between the UK and US?

Yes — UK VAT is 20% standard, with a 5% reduced rate on domestic energy and 0% on most food, children's clothing, and books. The US has no federal sales tax; states + cities levy 0% (DE, MT, NH, OR) to ~10.25% combined (Chicago, parts of CA). Effective consumption-tax burden is generally higher in the UK on discretionary spending, lower on essentials.

UK vs US Tax — Side-by-Side Comparison for 2026-27 / 2026

The UK and US run very different tax systems: the UK has a flatter PAYE structure with mandatory auto-enrolment pension and NHS-funded healthcare; the US layers federal + state + FICA with voluntary 401(k) matching and employer health insurance. This page compares income tax, social levies, retirement schemes, and consumption tax using HMRC 2026-27 figures (rest of UK) and IRS 2026 federal figures (single, standard deduction).

Take-home pay on the same nominal salary

Same numeric amount taxed as both a GBP salary (HMRC + Class 1 NI) and a USD salary (IRS federal-only, single). Currencies aren't directly comparable — this is a structural tax comparison. State income tax is excluded on the US side; pencil it in separately for high-tax states.

Gross salary	UK income tax	UK NI	UK take-home	US federal	US FICA	US take-home	Gap
£50,000	£7,486	£2,994	£39,520	£3,820	£3,825	£42,355	+£2,835
£100,000	£27,432	£4,011	£68,557	£13,170	£7,650	£79,180	+£10,623
£150,000	£53,703	£5,011	£91,286	£24,734	£11,475	£113,791	+£22,505
£250,000	£98,703	£7,011	£144,286	£51,304	£15,458	£183,238	+£38,951

Gap shows US take-home minus UK take-home. Excludes US state income tax (0–13.3%) and pension/401(k) contributions. UK figures use rest-of-UK 2026-27 (Scotland uses different rates).

Income tax brackets — side by side

🇬🇧 United Kingdom (2026-27, rest of UK)

£0 – £12,570: 0% (Personal Allowance)
£12,571 – £50,270: 20% (Basic)
£50,271 – £125,140: 40% (Higher)
£125,141+: 45% (Additional)

PA tapers £1-for-£2 above £100k (full PA gone at £125,140) — effective 60% marginal band. Plus Class 1 employee NI: 8% £12,571–£50,270, 2% above. Scotland uses 5 bands with 48% top.

🇺🇸 United States (2026 federal, single)

$0 – $16,100: 0% (standard deduction)
+$12,400: 10%
+$38,000: 12%
+$55,300: 22%
+$96,075: 24%
+$54,450: 32%
+$384,375: 35%
$640,600+: 37%

2026 IRS brackets per Rev. Proc. 2025-32. Standard deduction $16,100. Plus FICA 7.65% (6.2% SS to $183,600 + 1.45% Medicare). Plus state income tax 0–13.3%.

Key structural differences

Feature	🇬🇧 United Kingdom	🇺🇸 United States
Tax-free / standard deduction	£12,570 PA (taper above £100k)	$16,100 standard deduction (2026 single)
Top federal/national rate	45% over £125,140 (+2% NI = 47%)	37% over $640,600
Effective marginal trap	60% effective on £100k–£125,140 (PA taper)	No specific trap; +0.9% Add'l Medicare above $200k
State / sub-national	No (Scotland has separate 5-band system, top 48%)	0–13.3% state + city; 9 no-tax states
Social/health levy	Class 1 NI: 8% main band, 2% upper; employer NI 15%	FICA 7.65%; +0.9% Add'l Medicare above $200k
Universal healthcare	Yes (NHS, funded by general taxation)	No (employer/Marketplace insurance)
Mandatory retirement	Auto-enrolment 8% combined (3% employer + 5% employee)	None; voluntary 401(k) — typical match 50% on first 6%
Tax-free retirement	ISA £20,000/yr (no income limit; tax-free growth + withdrawal); LISA £4k/yr + 25% top-up	Roth IRA $7,000/yr (income limits); Roth 401(k)
Tax year	6 April – 5 April	1 January – 31 December
Filing deadline	31 January online (Self Assessment)	15 April (extension to 15 October)
Worldwide income	Residents on arising basis; remittance basis with annual charge	Citizens AND residents (worldwide); FBAR/FATCA
Capital gains	18% / 24% (residential and other from 30 Oct 2024); £3,000 annual exempt amount	Long-term (1+ yr): 0/15/20%; +3.8% NIIT above $200k
Dividend taxation	£500 allowance + 8.75% / 33.75% / 39.35% (rising to 10.75% / 35.75% / 39.35% from 6 April 2026)	Qualified: 0/15/20%; ordinary at marginal
Estate / inheritance	IHT 40% above £325k NRB (+£175k RNRB on main home); 7-year gift rule	Federal estate tax 40% above $15M (post-OBBBA)
Property purchase	SDLT (rest of UK), LBTT (Scotland), LTT (Wales); FHB relief up to £425k	No federal/state transfer tax; closing costs ~2–5%
Consumption tax	VAT 20% standard, 5% reduced, 0% on food/kids' clothes/books	No federal sales tax; state + city 0–10.25%

Retirement: UK pension/ISA vs 401(k)

UK auto-enrolment is mandatory; US 401(k) is voluntary. A £100k UK salary auto-enrols 8% combined (3% employer + 5% employee from gross). A $100k US salary triggers $0 mandatory employer retirement; if the employer offers a typical 50% match on first 6%, the employee must contribute $6,000 to capture the $3,000 match. Net result: similar combined contributions in many companies, but the UK floor protects employees who don't actively elect.

UK ISA has no clean US equivalent. £20,000/yr (2026-27), tax-free growth, tax-free withdrawal, no income limits. Roth IRA is the closest US analog but $7,000/yr with phase-out (single MAGI $146k–$161k 2026 estimated). Roth 401(k) has no income limit but follows 401(k) deferral rules. UK Lifetime ISA adds 25% government top-up on £4k/yr until age 50 — exclusive to first-home buyers and retirement.

Cross-border treaty. The UK-US treaty recognises 401(k)/IRA and UK pensions as 'pensions' (deferred until withdrawal for residents of either country). One-way 401(k)-to-QROPS transfers exist but trigger US tax + 25% UK Overseas Transfer Charge in most cases. ISAs are NOT treaty-protected — IRS treats holdings as foreign trusts (Form 3520/3520-A) and PFIC rules apply to most UK funds inside.

If you're moving UK → US

Tax residency: US residency triggers via Substantial Presence Test (31+ days current + 183 weighted across 3 years) or green card. UK residency ends per the SRT — typically when you leave for full-time work overseas.
UK pension: Stays in UK; treaty-recognized as US pension (no annual taxation on growth). Withdrawals taxed at marginal rate on US return; UK 25% lump-sum is NOT tax-free under US rules.
ISA: Lose tax efficiency on US residency — IRS taxes growth as a regular taxable account, plus PFIC rules on equity funds inside. Consider closing or moving to cash before US move.
State choice matters: A move to TX/FL/NV/WA leaves you with US federal only — typically beats UK by $20k+ at $100k. CA/NY/NJ adds 9–13% on top, narrowing the gap.
Capital gains: Long-term gains (1+ yr) qualify for 0/15/20% rates — much better than UK 18%/24%.
Property: No federal/state transfer tax; closing costs ~2–5% of purchase. Property tax is local: 0.3% (HI/AL) to 2.5%/yr (NJ/IL).
Healthcare: NHS replaced by employer/Marketplace insurance; budget $300+/mo premium plus deductibles. Net-after-cost shifts the comparison vs pure tax.

If you're moving US → UK

Tax residency: UK residency triggers under the SRT (commonly 183+ days, or 91+ with UK ties). US residency ends for resident aliens on departure, but US citizens remain taxed on worldwide income forever.
US citizen trap: Continue filing US returns from UK. Use Foreign Earned Income Exclusion (~$130k 2026) + Foreign Tax Credit. Renouncing requires Form 8854 and may trigger expatriation tax.
401(k) / IRA: Stays in the US until withdrawal. UK-resident withdrawal taxed at marginal rate, with US foreign tax credit. Don't transfer to QROPS unless a specialist confirms the math.
ISA caution: US citizens shouldn't open ISAs — IRS requires Form 3520/3520-A and PFIC rules on UK fund holdings inside. Stick with UK pensions, US 401(k)/IRA, taxable accounts.
NHS access: Available immediately to UK residents; replaces $300+/mo employer health insurance.
FBAR / FATCA: Report any UK account exceeding US$10k aggregate via FinCEN Form 114 (FBAR). Form 8938 (FATCA) thresholds start at US$50k.
Lower take-home: Expect noticeably lower take-home in the UK on the same nominal, especially £100k–£125,140 PA-taper range (60% effective marginal).

UK Income Tax Calculator

Banded breakdown for England, Wales, Scotland & NI; PA taper handled.

UK Take-Home Pay

Net pay after income tax, NI, student loan, and pension.

National Insurance Calculator

Class 1 (employees), Class 2 & 4 (self-employed) — 2026-27 rates.

US Tax Tools (ustax.tools)

Sister site — federal income tax, FICA, 401(k), state-by-state, and more.

Sources

UK figures: HMRC income tax rates, 2026-27. NI: HMRC NI rates. US figures: IRS Rev. Proc. 2025-32 (2026 inflation adjustments). FICA: SSA wage base 2026.