Living or working between the UK and the US brings many advantages – broader career options, access to two cultures, and often, family and financial ties that span continents. But with this global lifestyle comes added complexity, especially when it comes to your finances. If you’re an expat navigating income, investments, or inheritance across both countries, a clear understanding of tax and other legalities is essential. Here’s a guide to navigating your finances as a transatlantic expat.
Keep on top of dual taxation and reporting requirements
Unlike the UK’s residency-based tax model, the US taxes its citizens regardless of where they live. If you hold US citizenship or a Green Card, you must file a tax return every year (even if you haven’t lived in the US for decades). Add UK tax rules into the mix, and things can quickly get complicated. Fortunately, a tax treaty between the UK and US helps prevent you from being taxed twice on the same income, but you must file correctly to benefit. Expats with foreign bank accounts also face additional reporting requirements. If you have over $10,000 in non-US accounts at any time during the year, you must submit a Foreign Bank Account Report (FBAR) to the US Treasury’s Financial Crimes Enforcement Network.
How different income and investment types are taxed
Be aware that salary income, pensions, and investments are treated differently depending on which side of the Atlantic you’re on. UK residents earning income from a US source, and vice versa, may be eligible for foreign tax credits – but timing, classification, and currency issues can cause headaches. Investment vehicles like ISAs and 401(k)s pose particular problems. A UK ISA, for example, may be tax-free in the UK but fully taxable under US law. Similarly, US-based retirement accounts could trigger tax charges in the UK depending on how distributions are classified. Capital gains can also be taxed differently in each jurisdiction, so you might get unexpected bills unless you manage them carefully.
Gifting, inheritance tax, and the UK-US divide
Inheriting or passing on assets across two countries is not just about the right paperwork. It can have serious tax consequences, too. The UK has a 40% inheritance tax above certain thresholds, while the US applies estate taxes based on a significantly higher exemption. Each country also has different rules around gifting during your lifetime, and if your assets span both jurisdictions, you could get caught between two systems. Without proper planning, your beneficiaries might face double taxation or legal disputes. That’s why having a will recognised in both countries (and taking advice on estate structure) is vital.
Secure expert legal counsel to manage transatlantic finances
Navigating these rules by yourself is risky. From misfiled returns to non-compliance penalties, the consequences can be costly. Given the complexity and shifting nature of international tax laws, it’s essential to consult professionals who specialise in both UK and US systems. For tailored, accurate guidance on everything from dual tax filing to estate planning, US-UK cross-border tax and planning lawyers can help you stay compliant and protect your assets.
Clarity, confidence, and compliance
Cross-border life doesn’t have to mean financial confusion. Living a transatlantic life does mean added financial complexity, but with the right knowledge and support, you can stay ahead financially no matter which side of the pond you live on.
Nb. Collaborative post.
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