Moving from the US to the UK? Here’s What Happens to Your Taxes
Relocating across the Atlantic is exciting — but your tax obligations don’t pause at the border. Here’s a plain-English guide to what changes, what stays the same, and what most Americans abroad get wrong.
By Jungle Tax · 8 min read
Every year, tens of thousands of Americans relocate to the UK — for work, family, or a change of scenery. What many don’t realise is that the US taxes its citizens on their worldwide income, regardless of where they live. This means that moving to London doesn’t end your relationship with the IRS. It just adds HMRC to the picture.
The good news: with proper planning, you can usually avoid paying tax twice on the same income. The bad news: without it, the penalties for getting this wrong can be severe.
“The US is one of only two countries in the world that taxes based on citizenship, not residency. If you hold a US passport, you file — full stop.”
You still have to file a US tax return
This surprises many expats. Once you move to the UK, your primary tax home may shift — but your US filing obligation does not. US citizens and Green Card holders must file an annual federal return with the IRS, even if all their income is earned in the UK and taxed by HMRC.
The good news is that you’re unlikely to owe US tax on income that’s already been taxed in the UK. The US-UK Tax Treaty and the Foreign Tax Credit regime are designed to prevent this. But you must claim them — they don’t apply automatically.
Your key US filing obligations as a UK resident
- Federal tax return (Form 1040) — due April 15, with automatic extension to June 15 for expats living abroad
- FBAR (FinCEN 114) — required if your UK bank accounts exceed $10,000 at any point in the year
- FATCA (Form 8938) — for higher-value foreign financial assets, reported directly on your tax return
- Foreign Earned Income Exclusion (Form 2555) — lets you exclude up to ~$126,500 of foreign earned income (2024 figure)
- Foreign Tax Credit (Form 1116) — credits UK taxes paid against your US liability, often reducing it to zero
Now you also have UK tax obligations
Once you become a UK tax resident — typically after spending 183 days or more in the UK in a tax year — HMRC expects you to file a Self Assessment return and pay UK income tax on your earnings. The UK tax year runs from 6 April to 5 April, which itself catches many Americans off guard.
- UK tax year: 6 April — 5 April
- Self Assessment deadline: 31 January (online)
- UK income tax (basic rate): 20% on £12,571–£50,270
- UK higher rate: 40% on £50,271–£125,140
Your residency status also affects how your non-UK income is taxed. Non-domiciled individuals may be eligible to claim the remittance basis, meaning foreign income is only taxed if it’s brought into the UK. This is a complex election with its own costs and implications — specialist advice is essential before making it.
The areas most people get wrong
1. Pension accounts
Your 401(k) or IRA doesn’t automatically become a UK pension. Contributions, growth, and withdrawals may be treated very differently under UK tax law — and the treaty treatment of US retirement accounts is one of the most misunderstood areas in expat tax. Get specific advice before making any retirement account decisions post-move.
2. Property back home
If you rent out your US property while living in the UK, that rental income is reportable to both the IRS and HMRC. If you eventually sell it, US capital gains tax and UK CGT may both apply — though treaty provisions and the Foreign Tax Credit can reduce or eliminate double taxation with proper structuring.
3. Employer stock and equity
RSUs, stock options, and other equity compensation are taxed at different stages under US and UK rules. The timing mismatch — for example, US taxation at vest vs. UK taxation at exercise — can create unexpected liabilities on both sides of the Atlantic.
Many Americans abroad fall behind on their filings without realising it. If that’s you, the IRS Streamlined Filing Compliance Procedure is a penalty-free route to catch up — provided the non-compliance was non-wilful. Jungle Tax specialises in guiding clients through this process.
What good cross-border tax planning looks like
The Americans who navigate the US–UK tax system most effectively are those who plan before they move. A pre-departure review with a dual-jurisdiction specialist can identify elections to make, accounts to structure, and timing decisions that can meaningfully reduce your total tax burden across both systems.
After the move, annual coordination between your US and UK filings ensures that credits and treaty elections are applied consistently and that nothing falls through the cracks between HMRC and the IRS.
Need help navigating US–UK tax as an expat?
Jungle Tax specialises in cross-border tax compliance and planning for individuals moving between the US and UK. We handle both filings — so nothing gets missed.