US/UK Cross-Border Tax
Advisors in London
Our London office is the hub of our UK practice. We prepare and plan US and UK taxes together for Americans living and working in the United Kingdom.
One Team on Both Sides of the Treaty
London has one of the largest populations of US citizens outside North America, yet most of them are served by two advisers who never compare notes: a UK accountant who does not understand PFICs and a US preparer who has never read a Self Assessment return. We do both jobs with one team. The same people prepare the Form 1040 and the UK Self Assessment, work out foreign tax credits under the US/UK treaty, screen UK investments for PFIC exposure before purchase, and handle FBAR and Form 8938 reporting within the same engagement. When HMRC rules change, as they did when the non-dom regime was abolished and the Foreign Income and Gains framework arrived, we re-plan both returns together instead of patching each one separately.
Eleven Years of Unfiled US Returns
Case Study: London Cross-Border Engagement
A US citizen who had lived in London for eleven years had never filed a US return, held a stocks-and-shares ISA, and had built up significant value in a UK workplace pension.
Entered the IRS Streamlined Foreign Offshore Procedures: three years of returns, six years of FBARs, a non-willfulness certification, and no penalty exposure.
Unwound the PFIC positions in a controlled sequence, with purging elections and foreign tax credits neutralising the excess-distribution regime before it compounded further.
Applied Articles 17 and 18 of the US/UK treaty to confirm the UK pension growth was not currently taxable in the US, then rebuilt the client's portfolio around US-compliant holdings.
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IRS Penalties Assessed on Full Compliance
Cross-Border Technical Work
FEIE vs Foreign Tax Credit
The choice between the Section 911 exclusion and Section 901 credits is the biggest single lever on a London-based American's US return.
UK income tax rates generally exceed US rates, so many Londoners do better claiming the foreign tax credit on Form 1116 than the Foreign Earned Income Exclusion: excess credits carry forward ten years and preserve eligibility for the Child Tax Credit and IRA contributions. But the answer changes with UK pension contributions, carried interest, and equity compensation, so we model both routes each year. We also manage the mismatch between the two tax years (6 April vs 31 December), and we revoke or re-elect the FEIE only when the five-year lockout maths supports it.
PFIC and ISA Screening for US Persons
Most UK funds, ETFs, and stocks-and-shares ISAs are Passive Foreign Investment Companies under Sections 1291 to 1298.
A cash ISA is merely US-taxable. A stocks-and-shares ISA holding UK-domiciled funds triggers the PFIC excess-distribution regime: gains taxed at top ordinary rates plus an interest charge, reported fund by fund on Form 8621. We screen portfolios before purchase and identify funds with HMRC reporting status and US registration that avoid PFIC treatment. For existing holdings we evaluate QEF and mark-to-market elections, and we time disposals against UK capital gains tax so that fixing the US problem does not create an HMRC one.
UK Pensions, the FIG Regime, and NT Codes
Treaty-based pension planning and residence transitions under the post-2025 UK rules.
The US/UK treaty is one of the few that protects employer pension growth from current US taxation, but the position must be claimed correctly, often on Form 8833, and SIPPs, employer schemes, and the 25% lump sum are each treated differently. For new arrivals, we plan around the four-year Foreign Income and Gains regime that replaced the remittance basis in April 2025. For departing employees who stay on a UK payroll, we obtain NT (no tax) codes from HMRC to stop double withholding at source rather than reclaiming it years later.
Common Questions in London
I am an American in London. Do I really have to file US taxes every year?
Yes. The US taxes its citizens and green card holders on worldwide income regardless of where they live. Most Londoners owe little or no US tax after foreign tax credits, because UK rates are generally higher, but the filing obligation remains, along with FBAR and Form 8938 reporting for UK accounts. Non-filing is a compliance problem even when no tax is due.
Is my stocks-and-shares ISA a problem for US taxes?
Usually, yes. The ISA wrapper is invisible to the IRS, so income and gains are US-taxable, and most UK-domiciled funds inside an ISA are PFICs subject to punitive US taxation and Form 8621 reporting. We review holdings line by line. Some positions can be kept, some should be replaced with US-registered equivalents, and existing PFICs can often be unwound at modest cost if handled early.
How does the end of the non-dom regime affect Americans in the UK?
From 6 April 2025 the remittance basis was replaced by the Foreign Income and Gains regime: qualifying new UK residents pay no UK tax on foreign income and gains for their first four years, after which worldwide income is fully within UK tax. For US citizens this changes the credit ordering between the two systems, so planning for the arrival year, and again for year five, now matters far more than it used to.
Get Both Returns
Done by One Team
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