US Citizen Moving to the UK: Complete Tax Guide for 2026

Moving to the United Kingdom as a US citizen or green card holder triggers a cascade of tax obligations in both countries. Unlike most nationalities who can simply stop filing in their home country once they become UK tax residents, US citizens and green card holders continue to owe US tax returns and compliance filings indefinitely — regardless of where they live.

This 2026 guide covers everything you need to do before you move, upon arrival, and during your first year in the UK to stay compliant on both sides of the Atlantic.

Before You Move: US Pre-Departure Checklist

1. File All Outstanding US Tax Returns

Before departing, ensure you are fully current on US tax filings. Moving abroad does not eliminate past US obligations. If you are behind, consider using the IRS Streamlined procedures to catch up before your departure.

2. Understand Your Ongoing US Filing Obligations

Moving to the UK does not end your US tax obligations. You will need to file a US Form 1040 every year for as long as you remain a US citizen or green card holder — reporting worldwide income. You will also need to:

• File an FBAR (FinCEN Form 114) if your UK bank/investment accounts exceed $10,000
• Potentially file Form 8938 (FATCA) for larger foreign account balances
• File Form 8833 if claiming any US-UK treaty positions
• Report any foreign entities (Form 5471 for UK Ltd companies, Form 8865 for UK LLPs)

3. Review Your US Retirement Accounts

Before moving, consider maximising contributions to your US 401(k) and IRAs for the departure year — these contributions must be made when you still have US earned income. Once abroad, your ability to contribute to US retirement accounts may be limited depending on your tax strategy (FEIE eliminates IRA contribution eligibility; FTC preserves it).

4. Plan for US Investment Accounts

Many US brokerages (Vanguard, Fidelity, Schwab, etc.) restrict accounts held by US persons living abroad. Some will not permit new purchases of mutual funds for non-US residents. Before moving:

• Contact your brokerage to understand their non-resident policy
• Consider moving assets to brokerages that serve US expats (e.g., Interactive Brokers, Schwab International)
• Do not purchase UK mutual funds, ETFs, or ISAs — these will be Passive Foreign Investment Companies (PFICs) for US tax purposes, triggering extremely punitive tax rules

5. Consider State Tax Obligations

Several US states continue to tax former residents on worldwide income even after they move abroad. High-risk states include California, New York, Virginia, and South Carolina. You may need to take affirmative steps to establish non-residency before departure — simply moving is not always sufficient for state tax purposes.

Arriving in the UK: What Happens to Your UK Tax Status

UK Statutory Residence Test

You become a UK tax resident under the Statutory Residence Test (SRT) when you spend sufficient days in the UK (183+ days in a tax year is automatic; fewer days may also create residence depending on your ties to the UK). UK residency begins the earlier of:

• The date you arrive in the UK to live
• The date you start working full-time in the UK
• The date you have a home in the UK and spend at least 30 days there in the tax year

The 4-Year Foreign Income and Gains (FIG) Exemption

As of April 6, 2025, the UK replaced the non-domicile (remittance basis) regime with a new 4-year Foreign Income and Gains (FIG) exemption. Under this regime:

• Individuals who were not UK tax resident in any of the preceding 10 years can elect to exempt their foreign income and gains from UK tax for the first 4 tax years of UK residence
• During the 4-year FIG period, foreign income can be brought into the UK without UK tax
• After 4 years, you are fully taxable on worldwide income as a UK resident

For US citizens moving to the UK, the FIG exemption creates a significant planning window — but it interacts in complex ways with US taxation (since the US taxes you on the same foreign income). The key planning opportunity is ensuring the FIG period is used to structure investments and income streams optimally before the 4-year window closes.

Your First Year in the UK: US Tax Strategy

Choosing Your Tax Strategy: FEIE or FTC?

In your first year in the UK, you must decide whether to use the Foreign Earned Income Exclusion or the Foreign Tax Credit. For most US expats in the UK, the Foreign Tax Credit is the better strategy because:

• UK income tax rates (20–45%) are typically at least as high as US rates
• FTC preserves your ability to contribute to a Roth IRA
• FTC can shelter investment income that the FEIE cannot
• Excess credits carry forward 10 years

Opening UK Bank Accounts and FBAR

As soon as you open UK bank accounts and the balance (combined with any existing foreign accounts) exceeds $10,000, you have an FBAR obligation for that calendar year. Keep track of the maximum balance in each account during the year — you will need this for the FBAR filing.

UK National Insurance Number

Apply for a UK National Insurance (NI) number as soon as possible after arriving — you cannot start work legally without one. If you are self-employed, register for Self Assessment with HMRC.

Avoid UK ISAs and UK-Domiciled Funds

This is one of the most critical rules for US citizens in the UK: do not open a UK ISA and do not invest in UK-domiciled funds, ETFs, or unit trusts. Both are tax-efficient for UK nationals but create significant US tax problems:

• ISAs: The UK tax exemption is not recognised by the US — ISA income is fully US-taxable, and you pay UK tax too (none is creditable since the UK exempts it, creating true double taxation)
• UK funds and ETFs: UK-domiciled collective investments are Passive Foreign Investment Companies (PFICs) for US tax purposes. PFIC gains are taxed at the highest ordinary income rate plus an interest charge — potentially effective rates exceeding 60–70%.

Instead, invest through US-domiciled ETFs listed on US exchanges (NYSE, NASDAQ) — these are not PFICs and are taxed normally for US purposes.

UK Property: Buying a Home as a US Citizen

Buying a home in the UK is perfectly legal and straightforward for US citizens. Key tax considerations:

• Stamp Duty Land Tax (SDLT): UK property purchase tax — a UK tax, not deductible or creditable for US purposes
• UK capital gains tax on eventual sale: UK CGT on the gain (rates 18%/24% for residential property) — creditable against US capital gains tax
• US treatment: When you eventually sell, the US taxes the gain at capital gains rates. The IRS Section 121 exclusion ($250,000 / $500,000 married) may apply, but with important limitations for periods of non-US-resident use
• GBP mortgage gains: If you take out a GBP mortgage, any favourable exchange rate movement on the outstanding balance creates taxable “phantom gains” for US tax purposes when the mortgage is repaid — a commonly overlooked issue

UK Workplace Benefits and US Tax

UK employers often offer benefits that have US tax implications:

• UK pension contributions: Subject to Article 17 treaty analysis — seek professional advice before assuming they are US tax-deferred
• UK health insurance (BUPA etc.): Employer-provided health insurance is a taxable benefit for US employees (unlike US employer health plans, which are excluded from US income)
• Company car: Taxable as employment income for both UK and US purposes
• Relocation assistance: First £8,000 of qualifying UK relocation expenses is UK tax-exempt; the US may treat some relocation reimbursements as taxable income

Your US Filing Requirements Summary: Year by Year

• Every year: Form 1040 (worldwide income) + FBAR if applicable + Form 8833 if claiming treaty positions
• If Form 8938 thresholds met: FATCA reporting with Form 1040
• If UK Ltd company owned: Form 5471 with Form 1040
• If UK LLP interest: Form 8865 with Form 1040
• If UK trust interest or gifts: Form 3520 (separate deadline)

Get Expert Advice Before and After Your Move

The first year in the UK sets the foundation for all subsequent years of US-UK tax compliance. Making the right elections, choosing the correct strategy, and setting up compliant investment accounts from day one is far less expensive than correcting mistakes later.

Related guides:

• FEIE vs Foreign Tax Credit: Which Is Better for UK Expats?
• FBAR Filing 2026 Guide
• FATCA Reporting 2026 Guide
• UK Pension & US Tax Guide 2026
• US-UK Tax Treaty 2026 Guide
• US Tax Services
• UK Tax Services

Book a Pre-Arrival or First-Year Tax Consultation →