Moving from London (UK) to Sun-Drenched California & save taxes | UK Vs US Taxes The Unyielding Grasp of United Kingdom Income Tax If you thought moving continents was just a lifestyle choice, think again! George’s awe-inspiring journey from being an IT contractor in London, United Kingdom, to a dream job in California offers a financial masterclass in Income Tax optimization. George was making a tidy sum of £100,000 in London, but let’s not forget the chunky bite that the United Kingdom’s tax system was taking out of it. Navigating the maze of Income Tax rates—20% on income over the Personal Allowance up to £50,270 and 40% beyond that—he was paying a considerable sum to Her Majesty’s Revenue and Customs (HMRC). Before departing the United Kingdom, George had his tax homework to do. Filing an HMRC P85 form was crucial for informing them of his plans to leave, followed by the SA109 form within his Self Assessment tax return due by January 31st. Moving from London to California is a big move and requires a lot of tax planning. When moving to the United States, you may wish to know how much tax you will pay to the Internal Revenue Service (IRS). Use our free online US income tax estimator. A Breath of Fresh Air - Comparing London to California With a new job in California that paid him $150,000 annually, George entered a much more favourable Income Tax landscape. The Californian state income tax progressive system had him paying a 9.3% tax rate, which can be as high as 13.3%, while federal income tax also came into play. Being married with two children helped him leverage additional deductions. In California, the tax year is pretty straightforward—it follows the calendar year. The federal tax form 1040 and California’s 540 Resident Income Tax Return should be filed by April 15th. This is not to say that additional forms won’t come into play for investments, but for George, these are the basics. Lifestyle Perks It’s not just about Income Tax rates; California’s quality of life also was important for George. From beautiful beaches to dynamic culture, California presented an all-round package that was too attractive to pass up. Wise Property Choices: California (US) vs London (UK) George couldn’t ignore the property prospects in California either. Unlike London’s fluctuating Council Tax, California imposes a stable 1% general property tax rate, plus any voter-approved bonds and assessments. This presents a more transparent and potentially cost-effective way to invest in property. Property Investment: The Advantage Now, let’s talk homes. Buying a house in California offered George substantial financial perks. Unlike London’s fluctuating Council Tax, California imposes a fixed 1% general property tax rate, with some voter-approved additions. This is not only more transparent but also potentially more cost-effective. UK Capital Gains Tax (CGT) on homes when moving country George had to think twice about his London home. If he sold it after moving to California, the US tax authorities would want a piece of the pie, thanks to the US Capital Gains Tax. However, the U.S.-UK tax treaty might offer some relief. And remember, California has its own capital gains tax rates, so that’s another element in this intricate tax puzzle. In Summary: Moving to California from London, United Kingdom (UK)UK So, there you have it! George’s fascinating voyage from London, United Kingdom to California wasn’t just a geographical change but a savvy financial decision that positively impacted his Income Tax liabilities. His move reveals a lesson in maximizing tax efficiency while upgrading lifestyle and long-term investment opportunities. Could this be the blueprint for your own fiscal fairy tale? FAQ What are the key differences in Income Tax between London, UK and California? In London, you'll deal with the HMRC and you're taxed on a progressive scale, with rates at 20% up to £50,270 and 40% beyond that amount. In California, you'll work with the IRS and face a state income tax rate that varies, potentially up to 13.3% depending on your income, in addition to federal taxes. What forms do I need to file if I'm moving from London to California? In the UK, you'll need to fill out a P85 form to inform HMRC about your departure and possibly an SA109 as part of your Self Assessment tax return. In the U.S., you'll file a federal 1040 form and a California 540 Resident Income Tax form. What are the key tax dates to remember when moving from London to California? In the UK, Self Assessment tax returns are generally due by January 31st of the following year. In California and the rest of the U.S., tax returns are typically due by April 15th. How does buying a home in California compare to London when it comes to property taxes? Property taxes in London are generally based on Council Tax bands, which can fluctuate. In California, property taxes are usually around 1% of the home's assessed value, plus any voter-approved additions, which might be more cost-effective and predictable. What should I consider in terms of capital gains tax if I sell my London home after moving to California? If you sell your London property after establishing tax residency in California, you may be liable for U.S. Capital Gains Tax and California state capital gains tax. However, the U.S.-UK tax treaty may provide some relief or opportunities for tax c
Moving from London (UK) to Sun-Drenched California & save taxes | UK Vs US Taxes The Unyielding Grasp of United Kingdom Income Tax If you thought moving continents was just a lifestyle choice, think again! George’s awe-inspiring journey from being an IT contractor in London, United Kingdom, to a dream job in California offers a financial masterclass in Income Tax optimization. George was making a tidy sum of £100,000 in London, but let’s not forget the chunky bite that the United Kingdom’s tax system was taking out of it. Navigating the maze of Income Tax rates—20% on income over the Personal Allowance up to £50,270 and 40% beyond that—he was paying a considerable sum to Her Majesty’s Revenue and Customs (HMRC). Before departing the United Kingdom, George had his tax homework to do. Filing an HMRC P85 form was crucial for informing them of his plans to leave, followed by the SA109 form within his Self Assessment tax return due by January 31st. Moving from London to California is a big move and requires a lot of tax planning. When moving to the United States, you may wish to know how much tax you will pay to the Internal Revenue Service (IRS). Use our free online US income tax estimator. A Breath of Fresh Air - Comparing London to California With a new job in California that paid him $150,000 annually, George entered a much more favourable Income Tax landscape. The Californian state income tax progressive system had him paying a 9.3% tax rate, which can be as high as 13.3%, while federal income tax also came into play. Being married with two children helped him leverage additional deductions. In California, the tax year is pretty straightforward—it follows the calendar year. The federal tax form 1040 and California’s 540 Resident Income Tax Return should be filed by April 15th. This is not to say that additional forms won’t come into play for investments, but for George, these are the basics. Lifestyle Perks It’s not just about Income Tax rates; California’s quality of life also was important for George. From beautiful beaches to dynamic culture, California presented an all-round package that was too attractive to pass up. Wise Property Choices: California (US) vs London (UK) George couldn’t ignore the property prospects in California either. Unlike London’s fluctuating Council Tax, California imposes a stable 1% general property tax rate, plus any voter-approved bonds and assessments. This presents a more transparent and potentially cost-effective way to invest in property. Property Investment: The Advantage Now, let’s talk homes. Buying a house in California offered George substantial financial perks. Unlike London’s fluctuating Council Tax, California imposes a fixed 1% general property tax rate, with some voter-approved additions. This is not only more transparent but also potentially more cost-effective. UK Capital Gains Tax (CGT) on homes when moving country George had to think twice about his London home. If he sold it after moving to California, the US tax authorities would want a piece of the pie, thanks to the US Capital Gains Tax. However, the U.S.-UK tax treaty might offer some relief. And remember, California has its own capital gains tax rates, so that’s another element in this intricate tax puzzle. In Summary: Moving to California from London, United Kingdom (UK)UK So, there you have it! George’s fascinating voyage from London, United Kingdom to California wasn’t just a geographical change but a savvy financial decision that positively impacted his Income Tax liabilities. His move reveals a lesson in maximizing tax efficiency while upgrading lifestyle and long-term investment opportunities. Could this be the blueprint for your own fiscal fairy tale?
