You have just arrived to live and perhaps work in the UK, or maybe you have lived here for the last few years? In either case, you have entered the UK tax system which is new and different to your home US taxation regime.
You are likely to have to file tax returns in the UK and US now.
What are the main tax challenges for US nationals in UK?
Language – a W2 is called a P60 in the UK. And the standard UK tax return is an SA100 compared with the US form 1040 that you may know better. Oh, and social security will now be called National Insurance.
UK tax returns – depending on your experience, you may well know already that the UK filing deadline is 31 January which of course differs from the US. Quite bizarrely, the Brits have a UK tax year which ends 5 April annually. That takes many people a little time to acclimatise to.
Tax residence – your UK tax residence status is determined by range of different tests, and there is one excellent rule of thumb. If you spend more than 90 days in the UK in a tax year you are likely to be UK tax resident. However there are other measures which can lead you to trigger UK tax residence. For example, an American with a home and young family in the UK who works 2 months in the UK is likely to be UK tax resident after 45 days. There are many more variations of the residence rules ( based on work pattern, days overseas and past UK tax years for example) and we therefore strongly recommend you contact us on this subject.
New non-domicile 2025 rules – you may have just learned and understood the old non-domicile rules, but I am afraid everything changed from 5 April 2025. See also Oliver specialises in Non-domicile Tax from his London base. US nationals who arrive in the UK can now only claim full UK tax exemption on foreign income and gains for their first four UK tax years in the UK. They can bring those funds freely to the UK. The system is now established on a residence based test and the regulations are known as the FIG rules (foreign income and gains).
American nationals who have claimed the remittance basis in the past, before 25/26, and excluded overseas income/gains for tax, can often now access the TRF reliefs. This allows them to bring in potentially taxable funds (in the past) to the UK for a low tax charge of 12/15%. More details on this are available from us at any time.
Your US pension – this topic is in complex territory, but at this point we should note some basic rules. An American pensioner drawing her US pension in the UK, can generally expect to be taxed in the UK only, on her pension. A US employee based in the UK, who contributes to a US pension plan, should be entitled to limited UK tax relief on those contributions.
Positive aspects of tax for US nationals in the UK – a sample
Overseas workday relief – allows arrivals in their first four years to avoid UK tax (to a point) on income derived from overseas workdays.
Relocation expenses – these can be paid up to £8,000 when paid by employers for specific purposes.
The new FIG rules – see above, a generous tax exemption on foreign income and gains, for a limited four year period.
Detached duty relief – short term assignees to the UK ( up to two years) can receive accommodation and cost of living expenses free of tax.
Double tax treaty – the UK/US treaty exists principally to stop US/UK nationals suffering double taxation on income, gains and other sources.
Lottery winnings – they are tax-free in the UK, which makes a massive difference when our top rate of income tax is 45%.
I have managed the UK tax affairs of Americans for three decades, and I would be delighted to assist you with your UK tax planning. We have capacity to help you with your UK AND your US tax returns.
Oliver Heslop, founder and owner
