Living in the UK as a US citizen can be a great experience. But when it comes to taxes, things can get a bit complicated. The US is one of the few countries that still taxes its citizens no matter where they live. So, even if you’ve moved abroad, you’ll still have to deal with both US and UK tax rules.
It helps to know the basics – like which taxes apply to you, how residency works, and what tax breaks you can use. This guide shares some helpful info for US expats in the UK, so you can steer clear of common issues and maybe save some money too.
Understanding your tax obligations as a US citizen living in the UK
If you’re a US citizen living in the UK, there are tax rules to think about in both countries. The US asks you to file a tax return every year, even if you’re already paying taxes in the UK. That’s because the US taxes all income earned worldwide.
In the UK, you also pay tax on money you earn there – like wages, pensions, or investment income. How much you pay depends on how much you earn. And just so you know, the UK tax year runs from April 6 to April 5 of the next year.
Worried about getting taxed twice? It’s a common concern. But the US and UK have a tax treaty that helps avoid that. Plus, there are things like the Foreign Earned Income Exclusion and the Foreign Tax Credit that can help lower your US tax bill. These tools are a key part of US expat taxation.
The impact of the statutory residence test on your UK tax status
The Statutory Residence Test, or SRT, is how the UK decides if you’re a tax resident for the year. This matters because your tax status decides what income the UK can tax.
The SRT looks at things like how many days you spend in the UK, whether you have a home there, and if you work full-time in the country. If you’re in the UK for 183 days or more during the tax year, you’re usually seen as a resident. But even fewer days can count if you have strong ties to the UK.
For US expats, knowing your SRT result is important. It affects whether you pay UK tax just on UK income or on your income worldwide. Luckily, the US-UK tax treaty can help if you end up being a resident in both countries.
Filing tax returns: US and UK requirements explained
If you’re a US citizen living in the UK, you have to deal with tax rules in both countries. It can feel like a lot. In the US, you need to file a federal tax return every year. This return includes all the money you earned anywhere in the world – even if you already paid taxes in the UK.
If you have foreign bank accounts that total more than $10,000 at any time during the year, you also need to file an FBAR (Foreign Bank Account Report).
In the UK, if you earn money that isn’t taxed automatically – like from self-employment or renting out property – you’ll need to fill out a self-assessment tax return. The UK tax year runs from April 6 to April 5, with deadlines in October for paper returns and January for online returns.
Mistakes that US expats often make with their taxes and how to avoid them
Many US expats in the UK make mistakes that can cost them money or cause penalties. One common mistake is missing the deadlines for filing tax returns or FBAR reports. The IRS is strict about this – late filings can mean big fines.
Another mistake is not reporting all your worldwide income or getting confused about what needs to be declared. Some expats miss out on tax breaks like the Foreign Earned Income Exclusion and the Foreign Tax Credit, which could save them a lot.
Mixing up your residency status or errors with the Statutory Residence Test can also lead to surprise tax bills. To avoid these problems, keep good records, stay on top of tax rules, and talk to professionals who know expat taxes in the UK. That’s the best way to file correctly and save money.
Other important considerations for US expats in the UK
Taxes aren’t the only thing you need to think about as a US expat in the UK. Estate planning is important because UK inheritance tax rules are very different from those in the US. If you own property or investments in the UK, there are extra tax and reporting rules to keep in mind.
Pensions and retirement accounts can be tricky too. The tax rules for these differ a lot between the US and UK. Without careful planning, you might end up paying taxes twice or face penalties.
Why professional tax help is crucial for US expats living in the UK is explained below
Handling taxes in both the US and UK is not simple. The rules keep changing. That’s why working with a tax professional who knows expat taxes in the UK can really help.
With over 20 years of experience and thousands of expat returns filed, a skilled CPA offers real, personal support – no robots, no guessing. They can help you avoid costly mistakes, stay compliant, and find tax savings you might miss on your own.
For peace of mind and smart tax planning over the long term, it’s best to partner with an expert who understands the ins and outs of US citizens living in UK taxes.
