Cross Border Tax Accountant San Francisco: UK Ties, Bay Area Taxes

A cross border tax accountant in San Francisco prepares your US federal return, your California return and any UK Self Assessment return on the same facts, because California taxes residents on worldwide income, does not follow the foreign earned income exclusion and gives no credit for UK tax. For Bay Area residents with UK income, and for people moving between London and San Francisco with equity, those three systems have to be planned together.

This guide is for Americans in the Bay Area with UK accounts, pensions or property, for British professionals moving to San Francisco on a tech offer or a founder visa, and for Californians heading to London. It explains what California adds to a US/UK year, where equity compensation gets complicated, and what to expect from the firm you choose.

What does a cross border tax accountant in San Francisco do?

A cross border tax accountant in San Francisco works in three tax systems rather than two. The IRS taxes US citizens and residents on worldwide income from all sources. HMRC taxes UK residents on their worldwide income, subject to the foreign income and gains regime for qualifying new arrivals, and non-residents on UK-source income, under the UK tax year running from April 6 to April 5. California, through the Franchise Tax Board (FTB), taxes its residents on all income regardless of source and taxes nonresidents on California-source income.

Between the federal and UK returns sits the US/UK treaty and the foreign tax credit. California sits outside both. That is the single most important thing to understand about cross-border tax in the Bay Area, and it is why our cross border tax accountant San Francisco team prepares the California return alongside the federal and UK returns rather than treating it as an afterthought.

Why California changes the US/UK picture

Three rules, each published by the FTB, explain most of the difference.

No foreign earned income exclusion

Federally, a qualifying US citizen living abroad can exclude foreign earned income using the foreign earned income exclusion on Form 2555. California does not follow it. The 2025 Schedule CA (540) instructions tell filers to enter the federal foreign earned income and housing exclusion as a positive adjustment, adding it back to California income. Anyone still taxable in California while working in London, for example someone whose absence is treated as temporary, pays California tax on salary the federal return excludes.

No credit and no deduction for UK tax

California's Other State Tax Credit, claimed on Schedule S, is for net income taxes paid to other US states. The 2025 Schedule S instructions specifically exclude taxes paid to any foreign country. The same Schedule CA instructions state that California does not allow a deduction for foreign income taxes. UK income tax on UK salary, UK rental profit or UK dividends can reduce federal tax through Form 1116, but it does not reduce California tax.

The treaty does not bind California

Article 2 of the US/UK double taxation convention lists the US taxes it covers as the federal income taxes imposed by the Internal Revenue Code. The 2025 Schedule CA instructions tell California filers to add back income excluded under a US tax treaty unless it is specifically exempted for state purposes. This matters most for UK pensions. Federally, Article 18 of the treaty can defer US tax on growth inside a UK pension scheme. We have not found FTB guidance confirming that California follows that position, so California treatment of UK pension growth and contributions needs checking case by case, not assuming. ISAs are simpler on one level: neither the federal system nor California recognizes the ISA wrapper, so income and gains inside an ISA are taxable for both.

Does San Francisco have its own income tax?

No. San Francisco does not levy a personal income tax on residents' wages. A San Francisco resident pays federal income tax and California income tax, and that is the full personal income tax picture. The city's Gross Receipts Tax, which the San Francisco Treasurer and Tax Collector describes as a local business tax, applies to persons engaging in business in San Francisco, with exemptions for small businesses below a receipts threshold. It is relevant to a founder whose company trades in the city, not to an employee's personal return.

California residency when you move to or from the UK

Three different residence tests can apply to the same move, and they do not agree on dates.

California. Under FTB Publication 1031 (2025), you are a California resident if you are in California for other than a temporary or transitory purpose, or if you are domiciled in California but outside it for a temporary or transitory purpose. The publication says your state of residence is generally where you have your closest connections, and you are presumed to be resident for any tax year in which you spend more than nine months in California. An employee assigned to a California office for an indefinite period becomes resident on arrival, even while keeping a home elsewhere.

Leaving is harder than arriving. A California domiciliary who leaves under an employment-related contract for an uninterrupted period of at least 546 consecutive days is treated as a nonresident under the safe harbor in Publication 1031, unless intangible income exceeds $200,000 in a tax year covered by the contract or the main purpose of the absence is to avoid tax. Return visits totaling no more than 45 days in a tax year covered by the contract are treated as temporary. Someone who moves to London without meeting the safe harbor is judged on all the facts, including where they keep a home, bank accounts, a driver's license and professional ties.

United Kingdom. UK residence is decided by the statutory residence test, set out in HMRC's RDR3 guidance, which looks at days in the UK, work and ties. Split year treatment can divide the UK tax year of arrival or departure. We cover both in the statutory residence test explained and split year treatment.

Federal. A US citizen files on the calendar year throughout. A British national becomes a US resident for tax purposes under the green card or substantial presence tests, which our guide for Brits moving to the US walks through.

How is equity compensation taxed when you move between the UK and California?

Equity that vests or is exercised across a move is usually divided by workdays, but each of the three systems measures its share in its own way. The risk is that two jurisdictions tax the same slice while the foreign tax credit only partly fixes it.

1. HMRC. HMRC's employment-related securities manual treats securities income of internationally mobile employees as accruing evenly over a relevant period. For a securities option, ERSM162565 says that period runs from the acquisition of the option to the earlier of the chargeable event or vesting. ERSM162615 says HMRC expects a split based on UK and overseas workdays to be the most common method.
2. IRS. The Form 1116 instructions say employee compensation for services performed both inside and outside the United States is sourced on a time basis, with an alternative basis available in some cases. For a US citizen this does not change what is taxed federally, but it decides how much of the income is foreign source, which caps the foreign tax credit for UK tax on it.
3. California. FTB Publication 1004 says that if you are a California resident on the date restricted stock vests, California taxes the full vesting income. A nonresident on the vesting date is taxed on the part attributable to services performed in California. For nonstatutory options, the publication uses California workdays from grant to exercise over total workdays in that period. RSU plans differ in their terms, so the treatment of a particular plan should be checked against Publication 1004.
4. Incentive stock options. Publication 1004 notes that ISOs carry an alternative minimum tax adjustment on exercise for both federal and California AMT, and that if you exercise while a nonresident and later sell in a qualifying disposition while a California resident, California taxes the gain. Moving to California before selling ISO stock can bring the whole gain into California tax.

The overlap point is the third step. A Brit who moves to San Francisco and is California resident on the vesting date can owe California tax on the full vest, while HMRC taxes the UK workday share of the same income and California gives no credit for the UK tax. The federal return can credit the UK tax against federal tax on the foreign-source part. California cannot. Planning the move date against the vesting calendar is often worth more than anything done after the year ends.

Illustrative example: a British engineer at a US-listed tech company holds RSUs granted while she worked in London. Half of the vesting period falls before her transfer to the San Francisco office and half after. When a tranche vests after her arrival, HMRC can tax roughly the UK workday share, the IRS taxes the whole vest because she is now a US resident and allows a credit for the UK tax on the foreign-source part, and California taxes the whole vest because she is resident on the vesting date, with no credit for the UK tax. Her employer's payroll may have withheld in only one country. Each figure here depends on her actual workdays and plan terms and must be computed from them.

What the year looks like with three returns

Question	Federal (IRS)	California (FTB)	United Kingdom (HMRC)
Who is taxed on worldwide income	US citizens and residents	California residents	UK residents
Foreign earned income exclusion	Available if you qualify	Added back on Schedule CA	Not applicable
Relief for tax paid to the other country	Foreign tax credit on Form 1116	None for foreign taxes	Foreign tax credit relief under UK rules and the treaty
US/UK treaty	Applies	Treaty exclusions added back unless specifically exempt	Applies
Tax year	Calendar year	Calendar year	April 6 to April 5

Deadlines differ too. The federal return is due April 15, with an automatic two-month extension to June 15 for citizens living abroad, although the IRS charges interest on tax not paid by April 15. The FBAR is required when the aggregate value of foreign financial accounts exceeded $10,000 at any time during the calendar year, and is due April 15 with an automatic extension to October 15. For the 2025 to 2026 UK tax year, GOV.UK sets October 5, 2026 to register for Self Assessment, October 31, 2026 for paper returns, and January 31, 2027 for online returns and payment.

What Bay Area clients with UK ties get wrong

Assuming the foreign tax credit works for California. It is a federal credit. A California resident with UK rental income or UK dividends pays UK tax and California tax on the same income, and only the federal return gives relief.

Treating a London posting as the end of California residency. Without the 546-day safe harbor, or a clear break in closest connections, California can still treat you as resident, and then the FEIE add-back applies to your London salary.

Leaving equity to payroll. Employers often withhold in one jurisdiction only. The workday splits for HMRC, the IRS and California have to be prepared from your own travel and work records.

Applying federal treaty positions on the California return. UK pension treatment that rests on the treaty has to be reviewed separately for California.

Do you need an accountant with a San Francisco office?

No. The IRS, the FTB and HMRC do not care where your accountant sits. A San Francisco presence is useful for in-person meetings and for familiarity with Bay Area equity plans, but the essential test is whether one team works across federal, California and UK rules and reviews all the returns together. Our office is at 600 California St, San Francisco, CA 94108. If your UK affairs are centered in the capital, our guide to a cross border tax accountant in London covers the UK side in more depth, and our guide to the founder tax issues for a US/UK startup covers company structure.

Working with us in San Francisco

US/UK Cross Border Tax — US CPAs and UK tax advisers working as one team; London, Manchester, New York, San Francisco. For Bay Area clients we prepare federal and state returns, including California, alongside UK Self Assessment. Our pages for Brits in the US and founders cover the wider picture, and the tax specialists for US and UK page explains how our team is organized. To discuss your own position, get in touch.