U.S.-UK Dual Citizens Still File With Both the IRS and HMRC

A scenic view of the Elizabeth Tower (Big Ben) and the Palace of Westminster along the River Thames in London.

Many U.S.-UK dual citizens assume that living in the United Kingdom means they only need to file with HMRC. That is often not the case.

The United States generally taxes U.S. citizens and resident aliens on worldwide income, even when they live abroad. The IRS states that U.S. citizens and resident aliens living outside the United States are generally required to file tax returns and pay estimated tax in the same way as taxpayers living in the United States.

That means a dual citizen living in London, Manchester, Edinburgh, or elsewhere in the UK may still need to file a U.S. federal tax return.

HMRC Filing May Also Be Required

A U.S.-UK dual citizen may also need to file with HMRC depending on UK residence, income type, employment status, self-employment activity, investment income, rental income, and other factors.

UK tax residency can trigger UK taxation on worldwide income. The interaction between UK and U.S. rules can become especially complex when a person has income in both countries.

Common filing situations include:

  • UK employment income
  • U.S. employment income
  • Self-employment or consulting income
  • U.S. investment accounts
  • UK investment accounts
  • Rental property
  • Pension income
  • Capital gains
  • Foreign trusts or companies

Worldwide Income Must Be Reviewed

For U.S. purposes, dual citizens generally need to report worldwide income. This can include income earned in the UK, the U.S., and other countries.

Examples include:

  • Salary and wages
  • Bonuses
  • Self-employment income
  • Dividends
  • Interest
  • Capital gains
  • Rental income
  • Pension distributions
  • Business profits
  • Cryptocurrency income

Even if income was taxed by HMRC, it may still need to appear on the U.S. return.

Avoiding Double Taxation

Many dual citizens do not owe U.S. tax after claiming available relief, but filing may still be required. Two common tools are the Foreign Tax Credit and the Foreign Earned Income Exclusion.

The Foreign Tax Credit may help reduce U.S. tax when UK tax is paid on the same income. The Foreign Earned Income Exclusion may allow qualifying taxpayers to exclude certain foreign earned income, but it does not apply to all income types and requires eligibility under specific rules.

The best approach depends on income type, UK tax paid, future plans, retirement contributions, and whether the taxpayer expects to move again.

FBAR and Form 8938

Dual citizens with foreign financial accounts may also need to review FBAR and Form 8938 reporting.

A UK bank account, ISA, pension account, business account, or investment account may create U.S. reporting requirements. These forms are separate from the regular income tax return and can carry penalties if missed.

Foreign account reporting can apply even when the accounts are ordinary UK accounts used for daily life.

UK ISAs and Pensions Can Be Complicated

UK tax-advantaged accounts are not always treated the same way by the United States. An ISA may be tax-free in the UK but not necessarily tax-free for U.S. purposes. Some investments inside UK accounts may also raise additional U.S. reporting concerns.

UK pensions can also require careful review for income tax, treaty treatment, Form 8938, FBAR, and possible foreign trust considerations.

Do Not Ignore State Tax

Some dual citizens still have ties to a former U.S. state. A state may look at domicile, property, voter registration, driver’s license, family location, and financial ties.

Moving to the UK does not automatically end state tax residency in every case.

Get Help Filing Correctly

U.S.-UK dual citizens often need coordinated reporting across both systems. Expatriate Tax Returns helps Americans abroad prepare U.S. returns, review foreign income, address FBAR and Form 8938, and manage late filing situations.

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