This is the first article in our new series, “Americans Living in the UK”, where we’ll walk through the tax issues that come up when you’re a US citizen making your life on this side of the Atlantic. If you’re planning a move, already here, or advising clients in this position, the goal is the same: cut through the complexity and highlight what actually matters in practice.

Why This Matters

The US and UK both want a piece of the same pie.

• The US taxes its citizens no matter where they live.
• The UK taxes its residents on worldwide income.

That means if you’re an American living in the UK, you’re always in the crosshairs of two tax systems. The good news: there are rules, treaties and credits designed to stop you paying twice. The bad news: if you don’t know the rules, you can easily get caught out.

Understanding UK Tax Residency

The first step is working out if the UK considers you a tax resident.

• The UK uses the Statutory Residence Test (SRT), which looks at days spent in the country plus other ties (home, work, family, etc).
• This is a detailed set of rules that go far beyond just counting days. While day-counting is the starting point, the SRT also looks at “ties” to the UK, such as having a home here, working here, or having close family here. The more ties you have, the fewer days you can spend before you’re considered resident.
• Once you’re resident, you’re generally taxed on your worldwide income.
• For people moving mid-year, there’s also the split-year treatment, which can be a lifesaver. Instead of being taxed as if you were UK-resident for the whole tax year, you may be able to split it into a non-resident part and a resident part. That means income and gains before your move usually stay outside the UK tax net. But you have to meet the conditions (for example, starting full-time work in the UK or moving your main home here), and HMRC applies them strictly.

In practice: Don’t assume a “day count” alone decides your residency. The SRT is a rules-based system, and split-year claims need to be carefully checked. But if they apply, they can significantly reduce your UK tax exposure in the year of arrival.

What US Citizenship Means for Your Taxes

Unlike almost every other country, the US never lets go: citizens and green-card holders must file annual returns regardless of residence.

That includes:

• Reporting worldwide income (salary, investments, pensions).
• Filing FBAR and FATCA forms if you have non-US bank accounts above certain thresholds.
• Potentially paying US tax even if you’re already taxed in the UK.

There are some reliefs like the Foreign Earned Income Exclusion (FEIE) and Foreign Tax Credit (FTC), but they don’t remove the filing requirement.

Key UK Tax Basics Americans Need to Grasp

Here are the main points you’ll bump into right away:

• Income tax bands: 20%, 40% and 45% depending on income level.
• Capital gains tax: separate system, with annual allowance.
• National Insurance (NI): similar to US social security contributions.
• The end of the Remittance Basis: Until April 2025, non-domiciled residents could elect to be taxed only on UK income and foreign income they brought to the UK. That regime has now ended.
• The new Foreign Income & Gains (FIG) regime: From 6 April 2025, eligible individuals who are new to the UK can instead claim up to 4 years of exemption from UK tax on foreign income and gains, regardless of whether they remit it to the UK. After those 4 years, full UK taxation on worldwide income applies.

In practice: Americans moving to the UK after April 2025 need to plan around the FIG window carefully, especially if they have significant US-source investment income or plan to realise gains during those 4 years.

Common Pitfalls

Here’s where Americans in the UK most often go wrong:

1. Forgetting state taxes – even if you live in London, your old US state might still want a return.
2. Not matching tax years – the UK tax year runs April–April, while the US runs calendar year. That mismatch creates headaches.
3. Missing treaty claims – without proper forms, you might get taxed twice on pensions or dividends.
4. Exchange rates – reporting in the wrong currency or using inconsistent rates can throw off both US and UK filings.

Takeaway

If you’re an American living in the UK, expect to file in both countries. The challenge is lining up two different systems so you’re compliant and not overpaying. That means:

• Understand when you’re UK resident.
• Don’t ignore your US obligations.
• Use the treaty and credits properly.

This series will go deeper into the details: income, investments, pensions, treaties, compliance and practical tips. In the next article, we’ll look at how income and investments are taxed in both countries, and how to avoid double taxation.