US tax in the UK.
Answers for US citizens and green-card holders living in the UK. Still stuck? Book a call.
As a US citizen living in the UK, do I still have to file a US tax return?
Yes. The US taxes its citizens and green-card holders on worldwide income regardless of where they live, so you keep filing a Form 1040 every year in addition to your UK obligations. You may reduce or eliminate the US tax through the Foreign Earned Income Exclusion or foreign tax credits, but the filing obligation itself does not disappear simply because you are resident in the UK.
How does the UK decide whether I am a UK tax resident?
Since 2013 the UK has used the Statutory Residence Test (SRT). Spending 183 or more days in the UK in a tax year makes you automatically UK-resident, while fewer than 16 days makes you automatically non-resident. Between those extremes, residence depends on how many UK connections you have, such as family, accommodation, work and previous presence. You can be UK-resident under the SRT while remaining a US citizen taxed by the IRS.
How does the US-UK tax treaty help me avoid double taxation?
The US-UK Double Taxation Agreement (DTA) is a treaty that decides which country has the right to tax specific types of income, preventing the same money being taxed fully in both places. Where the treaty allocates taxing rights to both countries, a credit mechanism generally ensures you pay the higher of the two rates rather than both in full. You typically claim treaty benefits through your return, and in some cases by giving the payer a certificate of residence.
Can I claim a credit for the UK tax I pay against my US bill?
Usually yes. If you are UK-resident you pay UK tax on your income on the arising basis, and the foreign tax you pay can generally be claimed as a US foreign tax credit on Form 1116. That credit is what prevents most US citizens in the UK from being taxed twice on the same income. Where the UK rate exceeds the US rate, the credit normally covers the US liability; the ordering and sourcing rules matter, so the calculation should be done carefully across both returns.
How is a UK ISA treated for US tax purposes?
An Individual Savings Account (ISA) shelters UK savings and investments from UK Income Tax and Capital Gains Tax permanently, with an annual subscription limit of GBP 20,000 across all ISA types. The catch is that the IRS does not recognise the ISA wrapper, so for US purposes the income and gains inside an ISA are fully taxable on your 1040, and Stocks and Shares ISAs holding non-US funds can trigger complex PFIC reporting. Many US citizens in the UK find ISAs far less attractive than they are for non-Americans.
How are my UK pension and SIPP treated by the IRS?
UK-registered pensions receive tax relief locally: basic-rate relief of 20% is added automatically, and higher and additional-rate taxpayers can claim extra relief, with contributions tax-relieved up to the Annual Allowance. For US purposes the picture is more involved, because the IRS does not automatically treat a UK workplace pension or a Self-Invested Personal Pension (SIPP) like a US qualified plan. The US-UK treaty contains pension provisions that can help, but the treatment of contributions, growth and distributions should be reviewed for your specific arrangement.
Do I have to report my UK bank, ISA and pension accounts to the US (FBAR/FATCA)?
Generally yes. US persons must file an FBAR (FinCEN Form 114) if the aggregate value of their foreign financial accounts, including UK bank accounts and often ISAs and pensions, exceeds USD 10,000 at any point in the year. Separately, FATCA Form 8938 may be required with your 1040 once higher thresholds are met. UK financial institutions report account information that ultimately reaches the IRS, so these accounts are visible to US authorities.
How does UK National Insurance interact with US Social Security?
Anyone employed or self-employed in the UK generally pays National Insurance (NI), which builds entitlement to the UK State Pension. The US and UK have a social security agreement (a totalisation agreement) that prevents you from paying into both systems on the same earnings and helps you avoid gaps in coverage. Your employer can obtain a certificate of coverage to confirm which country’s system applies, which is especially important on assignment in either direction.
What does UK domicile mean and why does it matter for US citizens?
Domicile is not the same as residence. Your domicile of origin is usually the country your father considered his permanent home when you were born, and you can acquire a domicile of choice by settling permanently in a new country. Until 6 April 2025, non-domiciliaries living in the UK could use the remittance basis and pay UK tax on foreign income only when it was brought into the UK. A US citizen newly arrived in the UK may have been non-UK-domiciled, which historically affected how UK tax applied to non-UK income.
What changed with the UK Foreign Income and Gains (FIG) regime from April 2025?
From 6 April 2025 the UK replaced the non-domicile remittance basis with the Foreign Income and Gains (FIG) regime. New arrivals who have not been UK-resident in the previous ten tax years can elect to exempt all their foreign income and gains from UK tax for their first four years of UK residence, regardless of whether they bring the money to the UK. For US citizens this UK relief still sits alongside the ongoing US obligation to report worldwide income, so the two systems must be coordinated.
How does UK Capital Gains Tax affect US citizens in the UK?
UK Capital Gains Tax is charged on the profit when you sell or give away an asset that has risen in value, with the annual exemption reduced to GBP 3,000 for 2024/25 and main rates of 18% for basic-rate and 24% for higher and additional-rate taxpayers from 30 October 2024. Your main home is usually covered by Private Residence Relief. The US also taxes capital gains, often using a different cost basis and holding-period rules, so US citizens need to track gains under both systems and use foreign tax credits to avoid double taxation.
How do my UK and US filing calendars and deadlines fit together?
The UK tax year runs from 6 April to 5 April, with the online Self-Assessment return and tax payment due by 31 January and a second payment on account due 31 July. The US tax year is the calendar year, and US citizens abroad receive an automatic extension to 15 June with further extensions available. Because the two years and deadlines do not line up, most US citizens in the UK are juggling two distinct sets of returns, and the order in which they are prepared affects the foreign tax credit calculation.
What support does TaxSQR offer US citizens living in the UK?
TaxSQR provides specialist cross-border tax services for US citizens and green-card holders in the UK: coordinated US and UK returns, Statutory Residence Test determinations, foreign tax credit and US-UK treaty planning, FBAR and FATCA reporting, ISA, pension and SIPP reporting questions, and capital gains and departure planning. The goal is one joined-up filing position across both countries rather than two disconnected returns.