US Tax Preparation for Americans in the United Kingdom (UK)
It is a solid fact that relocating to the United Kingdom brings new experiences to the stage. But one obligation remains unchanged for US citizens and green card holders: filing with the IRS.
US tax preparation in the UK is necessary even if you already pay into the British system, as the US taxes its citizens on worldwide income. This approach establishes specific challenges for Americans in the UK taxes, including risks of double taxation, additional documentation in accordance with FBAR UK rules, and compliance with FATCA disclosures.
Dimov Tax specializes in expat tax UK matters, aiding our clientele in managing both IRS and HMRC requirements. From applying the US UK tax treaty to making sure of accurate IRS filing from UK, our team presents custom-tailored solutions for US expats who simply want confidence that their returns are completed successfully.
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The answer is yes. The United States embraces a citizenship-based tax system. In other words, all US citizens or green card holders, as well as dual nationals, should perform filing of an annual return—even if they are already paying UK taxes. This is a major point for anyone considering US tax preparation UK, since paying HMRC does not remove the IRS obligations.
Who Must File?
The filing obligation appears in the case of:
The income exceeds the IRS filing threshold for your filing status
You are self-employed and earn $400 or more during the year
Receiving pensions or property income along with other investment earnings
Holding or controlling foreign financial accounts that fall under FBAR UK reporting rules
The mentioned obligation applies regardless of where you live, establishing professional guidance on expat tax UK important. Proper IRS filing from UK makes sure that you satisfy all requirements while taking advantage of credits and treaty protections in parallel to the US UK tax treaty.
UK Tax System Overview
When working on US tax preparation UK, it is critical to recognize how the British system functions and how it differs from US rules. The UK tax year runs from April 6 to April 5, instead of the US calendar year (January–December). Such a difference can create timing challenges for IRS filing from UK, especially for Americans in the UK taxes who need to reconcile income across both taxation systems.
US Tax Preparation UK – System Comparison
Feature
United Kingdom
United States
Tax Authority
HMRC (His Majesty’s Revenue & Customs)
IRS
Tax Year
April 6 – April 5
January 1 – December 31
Employment Tax
PAYE (Pay As You Earn) withheld by employers
Federal withholding system
Income Tax
Levied at progressive rates on earnings
Federal and (in many states) state income tax
National Insurance
Contributions fund healthcare, pensions, and benefits
Social Security & Medicare payroll taxes
VAT (Value Added Tax)
Standard rate of 20% on goods and services
Sales tax varies by state, not federal
Acknowledging these distinctions is fundamental for effective expat tax UK planning. Treaty provisions under the US UK tax treaty can be helpful in reducing double taxation risks, but filing requires close attention to both sets of rules.
Avoiding Double Taxation: Treaties and Credits
One of the biggest concerns for Americans in the UK is naturally being taxed by both HMRC and the IRS on the same income. Fortunately, specific provisions aid reducing such a risk when handling US tax preparation UK.
Main Tools to Prevent Double Taxation
Provision
What It Does
When It’s Useful
US UK Tax Treaty
Defines how pensions, dividends, royalties, and other income are treated across both countries
Expats with retirement savings, investment portfolios, or cross-border income
Foreign Earned Income Exclusion (FEIE)
Lets qualifying taxpayers exclude up to a set annual limit of earned income from US taxation
Employees or self-employed expats working full-time in the UK
Foreign Tax Credit (Form 1116)
Provides a credit for UK income taxes already paid, offsetting US liability
Expats paying higher UK tax rates than US rates
These measures are central in terms of proper expat tax UK planning. Selecting between FEIE and the Foreign Tax Credit—or combining them in specific cases—depends on the exact income mix as well as residency status. With careful application, they prevent paying twice and simplify IRS filing from UK.
FBAR & FATCA Reporting Requirements
We are aware that many expats overlook account reporting rules when handling US tax preparation UK. Even if no tax is owed, these filings are mandatory, and penalty amounts can be steep.
FBAR (FinCEN 114): Should be complete if the combined non-US bank and investment accounts, covering UK accounts, exceed $10,000 at any point during the year. This is generally referred to as FBAR UK for Americans abroad.
FATCA (Form 8938): Broader disclosure for foreign financial assets. Filing thresholds simply vary depending on the residency and filing status.
Penalties: Non-compliance can lead to significant fines, even for unintentional errors.
For Americans in the UK taxes, the mentioned reports are separate from income tax filings but still linked with IRS filing from UK. They remain as a vital part of overall expat tax UK compliance.
Common UK Income Types for Expats
It should be noted that specific income categories may require special treatment when working on US tax preparation UK. For Americans in the UK taxes, the most common types to watch for when preparing the return are presented below:
Employment Income (PAYE): Salaries are subject to UK withholding under PAYE, but they should also be reported to the IRS. Proper coordination can enable the US UK tax treaty or the Foreign Tax Credit to reduce double taxation.
UK Pensions and Retirement Accounts: Contributions, growth, and withdrawals may be treated differently by HMRC and the IRS, requiring careful review for expat tax UK purposes.
Investment Income: Interest, dividends, and savings account earnings from UK institutions should be included in the US return and, if applicable, reported under FBAR UK rules.
Capital Gains: Selling property or shares in the UK may create gains taxed by HMRC. These also need to be reported to the IRS, with credits or treaty benefits available to offset overlap.
What if You’re Behind on US Tax Filings?
We are aware that it is not unusual for Americans in the UK taxes to discover they have missed the past filings. The good news is that the IRS presents a way to catch up through the Streamlined Filing Compliance Procedures. This program is specifically designed for expats who unintentionally failed to file, enabling a fresh start without major penalty payments.
Benefits of the Streamlined Program
Penalty-free catch-up: File the last three years of tax returns and six years of FBARs without facing fines.
IRS recognition: Once accepted, your account is treated as fully compliant.
Expats focused: Custom-tailored for taxpayers abroad who were unaware of their obligations.
We handle the full process—from preparing missed returns to making sure of the accurate IRS filing from UK. Our team presents guidance on whether to use the Foreign Tax Credit, FEIE, or US UK tax treaty in your back filings. With professional aid, expat tax UK catch-up can be managed smoothly.
Benefits of Working with Dimov Tax
Collaborating with the right advisor for US tax preparation UK can save both time and stress. At Dimov Tax, we focus on the distinct needs of Americans in the UK taxes, making sure that every filing is managed with maximum precision.
Why Expats Choose Dimov Tax
Senior-Level Expertise: In-house professionals with years of experience in expat tax UK and cross-border filings.
Knowledge of Both Systems: Deep understanding of IRS rules and HMRC processes.
End-to-End Compliance: Full support with tax returns, IRS filing from UK, and additional reporting like FBAR UK.
Transparent Pricing: Clear fees and no hidden costs.
Responsive Service: Dedicated support custom-designed to the cross-border requirements.
How to Get Started
In order to give an idea, we provide below how the process works:
1. Collect your documents
Here are the most common items that we ask for:
Document Type
Examples
Why It Matters
Income Records
UK payslips, employer P60/P45, US W-2/1099 forms
Necessary for accurate IRS filing from UK and applying credits or exclusions
Bank & Investment Statements
UK current accounts, savings accounts, brokerage reports
Supports income reporting and FBAR UK compliance
Retirement & Pension Records
UK pension statements, US 401(k) or IRA reports
Determines how the US UK tax treaty applies to contributions and withdrawals
Prior Tax Returns
Past US filings and, if available, UK self-assessment returns
Provides a baseline for preparing your new return
2. Upload securely – use our encrypted online portal to share documents with confidence.
