Published 19 June 2026 · Updated 7 November 2026 · 3 min read
Working for a US company from a flat in London, or for clients from a different country every few months, does not change the first rule: a US citizen files Form 1040 on worldwide income every year. The reliefs are good, but they have to be earned by meeting their tests, and the self-employed carry an extra liability the exclusion does not touch.
The exclusion and the physical presence test
The Foreign Earned Income Exclusion is US$130,000 for 2025 and US$132,900 for 2026. Nomads rarely meet the bona fide residence test, which looks for a settled home in one country. The physical presence test only counts days: 330 full days outside the US in any 12-month period, in any number of countries. Travel days to or from the US do not count as days abroad, and a few days over the limit lose the whole claim for that period, so keep boarding passes and passport stamps. The 12-month window can start on any day, which lets you straddle a move. Count with the checker.
Where you are paid from and in what currency is irrelevant; what matters is where you were when you did the work.
Self-employment tax does not go away
The exclusion removes income tax, not the 15.3% self-employment tax. A freelancer excluding US$100,000 of income still owes roughly US$14,000 in Social Security and Medicare contributions unless a social security agreement applies. The US–UK agreement covers UK residents who pay National Insurance, with an HMRC certificate of coverage. A true nomad who is resident nowhere usually has no agreement to rely on and pays the US tax.
Becoming resident somewhere
Most countries tax residents on worldwide income, usually from 183 days of presence and often sooner through ties. In the UK the Statutory Residence Test can make you resident with far fewer than 183 days if you have a home, family and work here. Local tax paid becomes a Foreign Tax Credit against US tax, which is why the credit, not the exclusion, often ends up the better relief once you settle. Treaty tie-breakers decide residence when two countries both claim you.
Nomad visas
A digital nomad visa is an immigration permission, not a tax status. Some (Portugal's D8, for instance) bring you into local tax once residence is established; a few Caribbean programmes exempt foreign income. Read the tax terms of the visa separately from the right to stay.
Accounts
Non-US accounts count towards the FBAR threshold of US$10,000 in aggregate, including Wise, Revolut, N26 and Monzo balances held with non-US entities. Form 8938 applies above the abroad thresholds. A US-based fintech account is not foreign.
Working from the UK for a US employer
UK income tax applies to UK workdays and, once resident, to worldwide income. The US employer may need a UK payroll arrangement or you may need to operate PAYE yourself. The exclusion or credit relieves US income tax; a certificate of coverage settles which social security system you pay into.
Records to keep
Entry and exit stamps, flight records, accommodation receipts, visas and permits, foreign tax paid, and statements for every non-US account. They support the day count, the credit and the FBAR.
Frequently asked questions
I have no US-source income. Do I still file?
Yes, if gross income exceeds the filing threshold (US$15,750 for a single filer in 2025). The exclusion reduces the tax, not the filing.
I was in nine countries this year. Can I still use the exclusion?
Yes, through the physical presence test, provided the 330 full days outside the US are met in a 12-month window and you have a foreign tax home.
Written by the US UK Expat Tax advisory team. Last reviewed 7 November 2026 · Figures relate to the 2025 / 2026 tax year unless stated.
Primary sources checked
General information, not personal tax advice. Rules and thresholds change; we confirm the position for your facts before any work.