Reporting UK Salary on a US Tax Return: P60s, Payslips and the Calendar-Year Gap

Reporting UK salary on a US tax return means turning April-to-April UK figures into a January-to-December total, because the IRS taxes the calendar year while your P60 covers the UK tax year. Build the number from payslips, translate it into dollars at a consistent exchange rate, then relieve the UK tax through the foreign tax credit or the exclusion.

It sounds clerical. It is where a surprising number of expat returns go wrong, usually because a P60 total was typed straight onto Form 1040 — which reports the wrong period, often the wrong figure, and leaves the foreign tax credit misaligned for years afterwards.

Why a P60 cannot go straight onto Form 1040

The UK tax year runs from 6 April to 5 April. Your employer issues a P60 after it ends, showing pay and tax for those twelve months. The US tax year is the calendar year, so every P60 straddles two US returns: roughly three months belong to one, nine months to the next.

A UK employer will not issue a Form W-2 either. The salary is still reported as wages on Form 1040, but the figure has to be built by you or your preparer. GOV.UK explains what the UK forms contain in its guide to P45, P60 and P11D forms.

Converting UK salary to the US return's calendar year

Payslips carry year-to-date totals that restart each 6 April, which makes the conversion mechanical. For any calendar year, take the pay from the previous UK tax year that fell in January to early April, and add the pay from April to December of the current UK tax year.

An illustrative example for the 2025 US return, using round numbers:

Do the same for the UK income tax deducted, using the tax columns on the same documents. You need both figures on a calendar-year basis before anything is converted into dollars.

Gross pay, not taxable pay

The "pay" on a P60 is usually taxable pay — after pension contributions made through a net pay arrangement or salary sacrifice. The US starting point is gross salary. Relief for UK pension contributions is then claimed separately under Article 18(5) of the treaty, within a US-style cap, as explained in UK pension contributions and US tax.

Bonuses belong in the calendar year they are paid, not the year they relate to. A bonus for 2025 paid in March 2026 is 2026 income on the US return, even though it may sit in the 2025-26 UK tax year.

Benefits in kind

Benefits reported on a P11D — private medical insurance, a company car, accommodation — are generally taxable compensation for US purposes as well, and they are reported for the UK tax year too. Split them across calendar years in the same way, and do not assume that because the UK taxed a benefit through your tax code, it is already inside your payslip totals.

Translating into dollars

Income must be reported in US dollars. The general rule is the exchange rate on the date income is received, but where income arrives evenly through the year — as a monthly salary does — the IRS allows the yearly average currency exchange rate. The IRS has no official rate and generally accepts any posted rate that is used consistently.

Use the spot rate on the payment date for a large one-off such as a bonus, and apply the same method every year. Mixing methods between years is what makes returns hard to defend later.

Relieving the UK tax

With salary on a calendar-year basis, the UK tax on it must follow. The foreign tax credit is claimed on Form 1116, and electing the accrual basis lines UK tax up with the income it relates to rather than the date it was paid. Leave National Insurance out — it is not creditable, as covered in which UK taxes count for the foreign tax credit.

The alternative is the foreign earned income exclusion on Form 2555, capped at $132,900 for 2026. For most higher earners in Britain the credit works out better, because UK tax on the salary usually exceeds the US tax — see Form 2555 explained.

Common mistakes

• Entering the P60 total as the calendar-year salary.
• Using taxable pay instead of gross pay, then also deducting pension contributions.
• Counting National Insurance as creditable UK tax.
• Switching between spot and average exchange rates from year to year.
• Leaving out P11D benefits because no cash changed hands.
• Double-counting January to April by adding two full P60s.

Americans abroad who extended their 2025 return with Form 4868 have until 15 October 2026 to file, although any tax due was payable from 15 April. Tranzesta builds the calendar-year figures from your payslips, P60s and P11Ds alongside the UK return, so both sides reconcile. Book a consultation before the October deadline.

Frequently Asked Questions

Can I use my P60 for my US tax return?

Not directly. A P60 covers the UK tax year from 6 April to 5 April, while a US return covers the calendar year. Use the P60 together with the December payslips from both UK tax years to rebuild January-to-December salary and tax, then report those calendar-year figures on the US return.

How do I convert UK salary into dollars for the IRS?

Either translate each payment at the exchange rate on the day it was received, or — because a monthly salary is received evenly through the year — use the IRS yearly average currency exchange rate for that year. The IRS generally accepts any posted exchange rate applied consistently, so choose one method and keep it every year.

Should I report taxable pay or gross pay on my US return?

Gross pay. The pay figure on a UK P60 is usually after pension contributions made through net pay or salary sacrifice. The US return starts from gross salary, and relief for qualifying UK pension contributions is claimed separately under Article 18(5) of the US–UK treaty, capped by reference to a comparable US plan.

Will my UK employer give me a W-2?

No. Form W-2 is issued only by employers operating US payroll. A UK employer issues a P60 and, where relevant, a P11D, and the salary is still reported as wages on Form 1040 using figures you build from those documents and your payslips.

Is a UK bonus taxed in the year it was earned or the year it was paid?

For a cash-basis individual taxpayer, the year it was paid. A bonus relating to 2025 but paid in March 2026 is 2026 income on the US return, even though it can fall in the 2025-26 UK tax year, which is one reason UK and US tax on the same bonus rarely land in the same US year.

How do I report a UAE salary on a US tax return?

The same way, without the tax-year conversion if your UAE payroll already runs on the calendar year. Translate into dollars consistently, and because the UAE levies no personal income tax there is normally no foreign tax to credit, so the foreign earned income exclusion on Form 2555 usually does the work.