US Tax Filing for Americans Living in the UK
Living in the UK as a US citizen or green card holder creates one of the most complex expat tax situations: both countries have high tax rates, a comprehensive tax treaty, and different tax year end dates (April 5 vs December 31). The Foreign Tax Credit typically eliminates double taxation for most UK-based Americans, but coordination between HMRC and IRS obligations requires specialist knowledge.
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What this filing may involve
Every situation is different. The forms below commonly apply — your specific filing may vary.
Documents usually needed
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- ✓Everything in Standard
- ✓Schedule C & SE for self-employment
- ✓Multiple income sources and currencies
- ✓Everything in Premier
- ✓Foreign Earned Income Exclusion (Form 2555)
- ✓Foreign Tax Credit (Form 1116)
- ✓FBAR filing (FinCEN 114) included
- ✓Everything in Expat
- ✓Schedules D & E for investments and rentals
- ✓Foreign asset reporting (Form 8938)
- ✓FBAR filing (FinCEN 114) included
Frequently asked questions about US Tax Filing for Americans Living in the UK
Should I use FEIE or FTC as a US expat living in the UK?
The Foreign Tax Credit is almost always more beneficial for UK residents. UK income tax rates (20%–45%) typically exceed the FEIE benefit. The FTC allows you to offset pound-for-pound the UK tax paid against your US liability, often eliminating any remaining US tax.
Do I need to file both a US and UK tax return?
Possibly yes. If you're employed in the UK, UK PAYE may handle your UK obligations. But if you're self-employed, have UK investment income, or meet HMRC's Self Assessment criteria, you'll need to file a UK return as well. We handle both.
Are ISAs taxable in the US?
Yes — ISAs (Individual Savings Accounts) are UK-registered tax-exempt accounts, but the US does not recognise the ISA exemption. Interest and gains within an ISA must be reported on your US return. The US-UK treaty does not currently extend treaty benefits to ISAs.
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