Crossing Borders: Defining a ‘Workday’ for UK and US Tax Purposes
For digital nomads, international executives, and cross-border commuters, the definition of a “workday” is more than just a matter of office hours—it is a critical metric that determines residency, tax liability, eligibility for tax reliefs and even determines which jurisdiction taxes compensation.
At its simplest, you’re generally taxed based on where you’re physically performing the work. It’s not just about where your employer is based, where your client is located, or what your contract says. If you’re sitting in London providing services, that income is likely to be UK-sourced. If you’re performing those same services in New York, it may be US-sourced. That’s why tracking your physical location day by day is critical for tax purposes.
While the UK and US share a language, their tax authorities (HMRC and the IRS) have vastly different methods for counting the hours and days you spend on their soil.
This guide explains how workdays are treated for tax purposes in both the UK and the US.
The United Kingdom: The “Three-Hour” Rule
In the UK, the Statutory Residence Test (SRT) provides a clear definition of a workday.
A day is counted as a UK workday if you perform more than three hours of work while physically present in the UK. This includes:
- Standard employment or self-employment(*) duties.
- Work-related training.
- Business travel (if that travel would be considered a deductible expense).
(*) A self-employment is generally taxable in the country of residence, regardless of where the work in performed. Foreign business travel would only be relevant if the individual worked from a permanent establishment in a foreign country and maintained separate books and records for a foreign business.
The United States: The “Any Time” Rule
The Internal Revenue Service (IRS) takes a much broader approach. For the US, presence is binary: you are either there, or you are not.
Under the Substantial Presence Test, the IRS considers you present in the US on any day you spend any amount of time in the country.
- The Partial Day Trap: If you land at JFK at 11:50 PM and clear customs, that 10-minute window counts as one full day of US presence.
- Work Content: Unlike the UK, the US does not typically distinguish between a “workday” and a “presence day” when determining residency. If you are there for a one-hour meeting, it is a day of US presence and counted as a workday.
For US citizens living abroad trying to qualify for the Foreign Earned Income Exclusion, the definition tightens. To count as a “full day” in a foreign country, you must be present there for a full 24-hour period starting at midnight.
The New York “Convenience of the Employer” Rule
For employees working remotely with a New York employer, an additional layer applies. Under New York State tax law, if you work outside New York for your own convenience (rather than because your employer requires it), those days are still treated as New York-sourced income.
This rule effectively overrides the traditional physical presence standard and often creates unexpected tax exposure for remote and cross-border workers.
The Importance of Record Keeping
Because these definitions are asymmetrical, “accidental residency” is a real risk. A business trip that counts as zero workdays in the UK could still count as a full day of presence in the US.
We recommend maintaining a contemporaneous log that includes:
- Flight itineraries and boarding passes.
- Calendar invites and time sheets showing hours worked.
- Evidence of “non-work” days (e.g., transit stops that may be exempt).
If you would like to discuss any of these points further, please get in touch.