Brits Moving to the US: A Tax Guide for Your First Year

Brits moving to the US become US tax residents once they hold a green card or meet the substantial presence test, and from then on the IRS taxes their worldwide income. This tax guide covers the first year: when residence starts, how the part-year return works, what HMRC needs before you leave, and which UK accounts and investments change treatment when you arrive.

When do Brits moving to the US become US tax residents?

A Brit becomes a US tax resident under one of two tests, and the visa type does not decide it on its own. The green card test applies if you are a lawful permanent resident at any time during the calendar year. The substantial presence test applies if you are in the US for at least 31 days in the current year and 183 days over three years, counting every day this year, one-third of the days last year and one-sixth of the days the year before.

Some days do not count. Students, teachers and trainees on F, J, M or Q visas who comply with their visa terms are generally "exempt individuals" whose days are excluded, and Form 8843 is used to claim that. Someone who is in the US for fewer than 183 days in the year, keeps a tax home abroad and has a closer connection to the UK may be able to stay nonresident using Form 8840, but that route closes at 183 days.

Test	How you meet it	Residency starting date
Green card test	Lawful permanent resident at any time in the calendar year	The first day in the year you are present in the US as a lawful permanent resident
Substantial presence test	31 days this year and 183 weighted days over three years	The first day in the calendar year you are present in the US
First-year choice	You elect in, under the conditions in Publication 519	The start of the 31-day qualifying period

The residency starting dates above are taken from IRS Publication 519, which also allows up to 10 days of presence to be disregarded when working out the starting date, provided you had a closer connection to a foreign country on those days. That matters for Brits who make a house-hunting trip in spring and move for good in the summer.

What does the first-year US tax return look like?

For most Brits the year of arrival is a dual-status year: you are a nonresident alien until your residency starting date and a resident alien after it. The IRS explains that the tax on the two periods is worked out under the rules that apply to each period. As a resident you report worldwide income, the same as a US citizen; as a nonresident you report only US-source income.

If you are resident on December 31, the return is Form 1040, with the nonresident part of the year set out as Publication 519 requires. Dual-status taxpayers face restrictions, and the one that surprises people most is that the standard deduction is not available for a dual-status year. For comparison, the standard deduction for tax year 2026 is $16,100 for a single filer and $32,200 for a married couple filing jointly, so losing it in the arrival year is not a small point.

Two elections that change the first year

• Treating a nonresident spouse as resident. A dual-status individual married to a US citizen or resident can elect to file jointly, which treats both spouses as resident for the whole year. That brings back joint rates and the standard deduction, but it also puts the full year's worldwide income, including UK salary earned before the move, onto the US return.
• The first-year choice. If you do not meet either test in the year you arrive but will meet the substantial presence test the following year, you may be able to choose resident status for part of the arrival year. Publication 519 requires 31 consecutive days of presence in the arrival year and presence on at least 75% of the days from the start of that period to the end of the year, with up to five days of absence allowed.

Illustrative example: a Brit transfers to her employer's New York office and lands on September 1, 2026, with no earlier US days. She is present for 122 days in 2026, so she does not meet the substantial presence test for 2026 and is a nonresident for that year on the normal rules. If she stays through 2027 she will meet the test for 2027, which may open the first-year choice for 2026. Whether that choice, a joint election with a US spouse, or simply filing as a nonresident for 2026 is best depends on her UK income before the move and the UK tax already paid on it.

Because the first-year choice depends on meeting the test in the following year, the 2026 return often has to be extended until the 2027 position is clear. That is normal, and it is one reason the first return is worth planning in advance rather than preparing in a hurry in April.

What HMRC needs before you leave the UK

The UK side is quick to deal with but easy to forget. If you do not file Self Assessment, GOV.UK says you should fill in form P85 when you leave. If you already file Self Assessment, you tell HMRC through the residence section of the return, form SA109. Under split-year treatment you may be non-resident from the day after you leave, depending on your circumstances.

Leaving does not end every UK tax obligation. UK rental income stays taxable in the UK. Under the Non-Resident Landlord Scheme, your letting agent deducts basic rate tax from the rent, or your tenant does if there is no agent and the rent is more than £100 a week. You can apply with form NRL1i to receive the rent gross, but you still declare the rental income in a Self Assessment return unless HMRC tells you otherwise. If you are unsure whether a return is still due, our guide on whether you need to file Self Assessment walks through the triggers.

What happens to your UK accounts once you are a US resident?

Once you are a US resident, your UK accounts become foreign accounts for US reporting purposes. The FBAR, FinCEN Form 114, is required when the combined value of your non-US accounts exceeds $10,000 at any time during the calendar year. For a Brit who has just moved, that almost always includes a current account, savings, ISAs and often pensions.

Form 8938 uses much lower thresholds for people living in the US than for Americans abroad: an unmarried filer reports when specified foreign financial assets are more than $50,000 on the last day of the tax year or more than $75,000 at any time, and a married couple filing jointly at more than $100,000 or $150,000. The two forms overlap but neither replaces the other; see FBAR vs Form 8938 for the differences, and filing the FBAR for the first time for the practical steps.

Which UK investments cause problems in the US?

ISAs

You can keep an ISA open after moving and it keeps its UK tax relief, but you cannot pay into it unless you are a Crown employee working overseas or their spouse or civil partner. The US gives the ISA no special status, so interest, dividends and gains inside it go on your US return.

UK funds and investment trusts

Most UK-domiciled funds, whether held in an ISA or a general investment account, are passive foreign investment companies for US purposes. PFIC shareholders may have to file Form 8621, and the default tax treatment is designed to discourage the holding. Our article on ISAs, PFICs and US tax sets out the options, many of which are easier to use before you become resident.

Assets with built-up gains

For US purposes, the basis of an asset is generally the amount you paid for it. Shares, property or other assets bought years ago can therefore carry a large gain into your US tax life. Whether to sell some holdings before you arrive, and how that interacts with UK capital gains tax and the temporary non-residence rules, is a pre-move decision rather than a first-year one.

Pensions

UK workplace pensions and SIPPs generally keep their protection under the US/UK treaty while they remain invested, but the detail depends on the scheme and on what you do with it. Read how the treaty treats UK pensions before transferring, consolidating or drawing anything.

Social Security, National Insurance and state taxes

The US/UK social security agreement generally stops you paying into both systems for the same work. An employee sent from the UK to work in the US for a period not expected to exceed five years can usually stay in the UK National Insurance system under the detached worker rule, supported by a certificate of coverage. Otherwise US Social Security tax normally applies to US work. The SSA's summary of the agreement explains how credits in both systems can later be combined.

State income tax is a separate layer. Most states tax their residents, a few have no personal income tax, and each state applies its own residency rules and start date. A move to New York, California or Massachusetts creates a state return alongside the federal one, and the state does not always follow federal treatment of foreign items.

Your first-year checklist

1. Work out your residency starting date under the green card test or the substantial presence test, and keep a record of every day you spend in the US.
2. Tell HMRC you are leaving with form P85, or through SA109 if you file Self Assessment, and confirm whether split-year treatment applies.
3. If you let a UK home, register for the Non-Resident Landlord Scheme and decide whether to apply to receive rent gross.
4. Review ISAs, UK funds and investment trusts for PFIC exposure, ideally before your residency starting date.
5. List every UK account with its highest balance during the calendar year so the FBAR and Form 8938 tests can be applied.
6. Decide whether a joint election or the first-year choice makes sense for the arrival year, and extend the return if the answer depends on the following year.
7. Check your state's residency rules and whether a certificate of coverage is needed for National Insurance or Social Security.

US/UK Cross Border Tax is US CPAs and UK tax advisers working as one team, with offices in London, Manchester, New York and San Francisco, so the UK exit and the US arrival are planned together. See our tax guide for Brits moving to the US and living there, our individual tax return service, or contact us before your move date.