As an American citizen making the big move to the UK there a number of things you have to consider and be aware of, a key one being your UK and US tax obligations.
The UK is one of the top destinations for US expats. With a common language, a rich history and booming financial, tech and creative industries, there is a lot for Americans to love. Another perk huge perk for Americans about to move to the UK is that the US dollar currently stands strong against the British pound. Therefore it’s a good time to buy in the UK, as you will get more for your money.
Anyone identified as a US citizen or green card holder is obliged to file a US federal tax return, whether living abroad or within the US. Therefore, if you are an American citizen living in the UK you must file a US tax return declaring your worldwide income.
You are, in theory, liable to US taxes. However, with expert US expat tax advice, your US tax owed can be offset through Foreign Earned Income Exclusion (FEIE) and/or Foreign Tax Credit, which allows you to claim a dollar tax credit for every Us dollar equivalent of tax paid in another country.
Filing Dates for Expats
April 15th- All taxes you owe to the US must be paid.
June 15th- Expats receive a filing extension until June 15th, with a further extension available until October 15th.
Extra Filing Requirements for Expats
American Expats must declare any overseas assets worth over $200,000 per person (excluding property and other tangible assets such as cars and jewellery). This must be done using a form 8938.
If you have an aggregate total of over $10,000 in one or split between several foreign bank and investments accounts at any time during the tax year, you are required to file an Foreign Bank Account Report (FBAR). This declares all account details and balances, and includes all accounts you have control over, such as company bank accountant and joint accounts.
If you have been living in the UK and were not aware of your US tax filing obligations, the IRS have set up an amnesty program that allows you to catch up on your US filing without being subject to paying penalties, this is called a Streamlined Procedure.
As a US citizen living in the UK, you are also subject to UK taxes. The British tax year between April 6th to April 5th. British tax returns should be filed by January 31st of the year following the end of the given tax year.
For expert US expat tax advice contact us now.