Moving to the UK from the US: Tax Steps in the Right Order

The order matters. Two tax systems apply from day one — the UK's on residence, the US's on citizenship — and the moves that reduce friction on one side often create problems on the other. This guide covers moving to UK from US tax mechanics in the sequence a US citizen or green-card holder actually encounters them: UK split-year treatment on arrival, the 4-year Foreign Income and Gains (FIG) regime that replaced non-dom status in April 2025, treaty tie-breaker rules, and the retirement account decisions that need to be made before packing a container.

None of what follows is legal or tax advice. UK and US rules interact in ways that a written guide cannot resolve for a specific fact pattern, and both jurisdictions revised their frameworks in 2025 and 2026. Verify each figure with a cross-border adviser before acting on it.

The UK arrival year: split-year treatment

UK tax residence is determined by the Statutory Residence Test (SRT), not a single day count. An arriving individual is UK-resident for the tax year (6 April to 5 April) if they meet an automatic UK test — such as spending 183 or more days in the UK — or fail the automatic overseas tests and satisfy the sufficient-ties test. Under the standard rules, residence applies to the whole tax year.

Split-year treatment softens that. Where a qualifying case applies — most commonly Case 4 (starting to have a home in the UK), Case 5 (starting full-time work in the UK), Case 6 (ceasing full-time work overseas) or Case 8 (starting to have a UK home only) — the tax year is split into an overseas part and a UK part. Foreign employment income, foreign investment income and non-UK gains arising in the overseas part fall outside the UK charge. Only income arising after the split date is taxed in the UK.

Split-year cases are prescriptive. The dates matter: acquiring a UK home before the family arrives, or working from the UK during a short pre-move visit, can bring the split date forward and drag more income into the UK charge. Detailed treatment sits in the UK Statutory Residence Test explained, and the general mid-year mechanics are covered in moving countries mid tax year.

The 4-year FIG regime replaces non-dom

The remittance basis and the concept of domicile as a tax connecting factor were abolished from 6 April 2025. In their place is the Foreign Income and Gains regime: qualifying new UK residents can elect, year by year, to exclude foreign income and foreign gains from UK tax for the first four tax years of residence. The regime is meaningfully narrower than the old non-dom rules, which for many claimants was effectively indefinite.

Eligibility depends on two conditions. First, the individual must not have been UK-resident in any of the ten consecutive tax years immediately before becoming UK-resident. Second, the election must be made in the self-assessment return for each year in which relief is claimed — it is not automatic and it cannot be applied retroactively. Foreign income and gains covered by an election are exempt whether or not remitted, which removes the tracing complexity that dominated the remittance basis.

The trade-offs are worth understanding before electing. Making a FIG claim disallows the UK personal allowance and the CGT annual exempt amount for that year. Distributions from certain trust structures that were tolerable under non-dom rules may be caught. The four-year window is a hard stop: from year five, arising-basis worldwide taxation applies. Prior remittance-basis users have a separate mechanism — the Temporary Repatriation Facility (TRF) — to bring pre-6 April 2025 foreign income and gains into the UK at a flat 12% during 2025/26 and 2026/27, rising to 15% for 2027/28. The full picture is in the UK non-dom abolition guide.

For US citizens, the FIG regime has less appeal than it did for other nationalities under non-dom rules. US tax on worldwide income continues regardless of UK elections, so foreign income excluded from UK tax is not tax-free — it remains fully taxable in the US and generates no UK tax for the US foreign tax credit to soak up. Verify with a cross-border adviser whether a FIG election, a partial election, or arising-basis treatment produces the lowest combined liability in the specific case.

US filing continues — citizenship-based taxation

The United States is unique among major economies in taxing on citizenship. A US citizen or green-card holder living in the UK still files Form 1040, still reports worldwide income, and still faces the full federal rate schedule up to 37% (state rates of up to 13.3% may or may not apply depending on the ties left behind). The One Big Beautiful Bill Act (OBBBA), signed on 4 July 2025, made the TCJA seven-bracket structure permanent and set the 2026 standard deduction at $16,100 for single filers and $32,200 for married filing jointly. The Foreign Earned Income Exclusion is $132,900 for 2026, and the SALT cap is roughly $40,400 for 2026 before its scheduled taper.

Two mechanisms reduce double taxation. The Foreign Earned Income Exclusion (FEIE) removes up to $132,900 of foreign earned income from US tax, but requires physical presence or bona fide residence tests that the arrival year often fails. The Foreign Tax Credit (FTC) allows US tax to be reduced dollar-for-dollar by UK income tax paid on the same income, subject to per-basket limitations. Because UK marginal rates (up to 45%) exceed US rates, the FTC generally eliminates residual US tax on UK-source earned income — but not on unearned income taxed lightly in the UK, nor on income excluded via a FIG election. The trade-offs are compared in FEIE vs foreign tax credit.

Reporting obligations survive the move. FBAR (FinCEN 114) is due for aggregate foreign account balances above $10,000 at any point in the year; FATCA Form 8938 has higher thresholds that vary by filing status and residence. First-year-abroad mistakes on these are common and expensive to unwind — see first year abroad US tax mistakes and the FBAR and FATCA reporting guide. State tax residency — particularly California, Virginia, South Carolina and New Mexico — does not fall away automatically on departure and needs its own release plan.

Treaty tie-breaker rules

Where UK domestic law makes an individual UK-resident and US domestic law continues to treat them as a US person, the US–UK Income Tax Treaty (2001, as protocol-amended) provides tie-breaker rules for treaty purposes. Article 4(4) tests, in order: a permanent home available in each state, centre of vital interests, habitual abode, and nationality. A US citizen with a UK-only permanent home and their spouse, work and social ties in the UK is generally treaty-resident in the UK.

Treaty residence does not, however, override the treaty's savings clause. The US retains the right to tax its citizens as if the treaty did not exist for most provisions. Practically, this means the treaty resolves questions of source and re-sourcing for credit purposes but does not exempt a US citizen from US filing or from US tax on US-source income. The mechanics of dual residence and re-sourcing are covered in dual tax residency tie-breaker and in the framework overview at double taxation treaties explained.

Headline figures compared

Rates and thresholds as of 2026 and subject to change. The UK now applies inheritance tax on a residence basis rather than domicile, catching long-term residents (present in the UK for tax purposes in 10 of the previous 20 UK tax years) on worldwide assets, with a tail after departure.

ISAs, SIPPs and the PFIC trap

The two most common UK tax-advantaged wrappers behave very differently under US treatment. An Individual Savings Account (ISA) is not recognised by the IRS as a tax-favoured vehicle. Interest, dividends and gains inside an ISA are fully taxable to a US person on the arising basis, and — critically — most UK-domiciled equity and bond funds held within ISAs are Passive Foreign Investment Companies (PFICs) for US purposes. PFIC treatment is punitive: annual mark-to-market or QEF elections, punitive default excess-distribution taxation, and Form 8621 filings per holding. For US persons, ISAs are usually best held in cash or in US-listed securities where a broker will accept a UK-resident client. Detail on the PFIC regime lives in PFIC rules for US expats.

Self-Invested Personal Pensions (SIPPs) are treated more favourably. The prevailing IRS position, supported by Article 17 and 18 of the US–UK treaty, is that UK pensions — including SIPPs — are eligible pension schemes; internal growth is not currently taxed as it arises for US persons, and periodic distributions are covered by the pension article. Employer contributions to a UK workplace pension are generally excluded from US taxable income up to reasonable limits; employee contributions typically are not deductible for US purposes. The treaty position is well-established for standard workplace and personal pensions but less clean for unusual structures and for the 25% tax-free lump sum, which several practitioner analyses treat as taxable to the US even though it is UK-exempt. Coverage from the US side sits in foreign pension US tax treatment.

Pension consolidation sequencing

The order in which retirement accounts are handled changes the total tax paid. A generalisable sequence for a US citizen moving to the UK:

• Before departure: consolidate multiple 401(k)s with prior employers into a single traditional IRA while still a US resident. Rollover mechanics are simpler with a US address on file, and it removes future coordination overhead. Consider whether a Roth conversion window exists in the departure year — US marginal rates may be lower in that year than in the future UK residence period, and Roth accounts avoid future UK income tax on distributions (HMRC's practical treatment of Roth withdrawals is generally favourable, though not guaranteed by statute — verify with an adviser).
• Do not attempt to roll a US IRA into a UK pension. HMRC does not recognise US IRAs as overseas pension schemes for transfer purposes, and any distribution to move the funds would be a taxable event in the US with a 10% early-withdrawal penalty if under 59½. Direct transfers between US and UK pension systems generally do not work in either direction.
• UK workplace pensions: enrolling in an employer's workplace pension is usually beneficial. Employer contributions escape US tax under the treaty; employee salary-sacrifice contributions reduce UK-taxed compensation but do not automatically reduce US-taxed compensation, which can create timing mismatches. The FTC generally absorbs the residual US tax where UK marginal rates are higher.
• SIPP contributions: personal SIPP contributions from a US citizen typically receive UK tax relief but not US tax relief. The account still benefits from treaty-protected internal growth. Do not hold PFIC funds inside a SIPP — although treaty protection likely shields internal PFIC income for US purposes, the position is unsettled enough that many advisers avoid the exposure entirely by using US-listed ETFs or individual securities.
• Existing IRAs: leave them with a US custodian that accepts UK-address clients. Distributions in retirement will be taxable by both countries in principle; the treaty allocates primary taxing rights and the FTC resolves the residual. Some US brokerages restrict accounts for UK residents — line this up before the address changes.

Order of operations for the move

Approximate sequence for a US citizen relocating to the UK, assuming the move happens partway through both tax years:

• 12 months before: confirm the UK visa route and expected arrival date. Model FIG eligibility (ten prior non-resident years) and whether a claim actually helps given continued US taxation.
• 6 months before: consolidate 401(k) plans into a single IRA. Consider Roth conversion in the departure year. Review taxable investment accounts for embedded gains that would be cheaper to realise pre-arrival under US-only rates than post-arrival under UK CGT rates of 18–24%.
• 3 months before: sell PFIC-risk holdings that would otherwise trigger UK taxation on unrealised appreciation on arrival. Line up a US-broker relationship that permits UK-resident account maintenance.
• On arrival: document the split-year qualifying case with dated evidence (tenancy start, employment start, family arrival). Register with HMRC for self-assessment where required.
• Within the first UK tax year: decide on FIG election with an adviser. File the first UK self-assessment reflecting the split. Continue US filing with FTC / FEIE elections and Forms 8938, FBAR and 8621 as applicable.
• State exit: address California, New Mexico, Virginia or South Carolina residency where relevant — filing a part-year state return and severing ties (voter registration, driving licence, physical presence) is not optional.

Consult moving to Europe while keeping a US job if remote employment from a US employer is part of the picture — employer-of-record versus direct employment materially changes the UK social-security position and the US employer's UK permanent-establishment risk.

Where to go next

Country-level detail sits on the United Kingdom and United States pages. Side-by-side headline comparison is available via the country comparison tool. For upstream concepts, the guides on how tax residency works and double taxation treaties cover the frameworks referenced above. Recurring questions from readers making this move are collected on the FAQ.