Tax Services for US Expats in the UK: Avoid Double Taxation

Introduction

Living in the UK as a US citizen brings incredible opportunities — but also complex tax challenges. One of the few nations that taxes its residents according to their citizenship rather than where they live is the United States. This means that even if you live and work in the UK, you still have to file a US tax return. Without proper tax services for US expats in the UK, you could face double taxation — paying tax on the same income twice.

Fortunately, the US–UK tax treaty and the UK’s double taxation relief rules are designed to prevent this. However, navigating both systems can be daunting without expert help. This guide explains how professional tax accountants help US expats stay compliant, minimise their tax liabilities, and avoid costly mistakes.

Understanding Tax Obligations for US Expats in the UK

The first step in managing your tax responsibilities is understanding that both the IRS (Internal Revenue Service) and HMRC (His Majesty’s Revenue & Customs) expect you to file returns.

• US Obligations: All U.S. citizens and Green Card holders must report their worldwide income to the IRS, regardless of their place of residence.

• UK Obligations: Once you become a UK tax resident, you must also declare income earned in and outside the UK to HMRC.

Without professional tax services for US expats in the UK, the dual filing process can become confusing — especially when differentiating which income is taxable in each country.

The Role of the US–UK Tax Treaty

The US–UK tax treaty plays a critical role in ensuring that expats are not taxed twice on the same income. It sets out clear rules to determine which country has the primary right to tax particular types of income, such as employment income, pensions, and dividends.

For example, employment income is typically taxed in the country where the work is performed. If you’re employed in London by a UK company, the UK has the taxing right, though you must still report this income to the IRS.

Tax professionals use the treaty’s provisions to strategically allocate income, claim credits, and avoid double taxation. Understanding the treaty articles is key, which is why expert guidance is essential.

Double Taxation Relief in the UK

If you pay tax in one country, the other may allow you to offset that payment through a foreign tax credit. The UK’s double taxation relief system ensures that tax paid to the US can be credited against your UK liability (or vice versa).

For instance, if you paid $5,000 in US tax on investment income and owe £4,000 in UK tax on the same income, the credit may eliminate or reduce your UK liability. Accountants specialising in tax services for US expats in the UK handle these calculations to ensure maximum efficiency.

Foreign Tax Credit (FTC) and Foreign Earned Income Exclusion (FEIE)

Two primary tools help US expats avoid double taxation:

1. Foreign Earned Income Exclusion (FEIE) – Allows expats to exclude up to $126,500 (2024 limit) of foreign-earned income from US taxation if they meet residency or physical presence tests.

2. Foreign Tax Credit (FTC) – Gives credit for taxes paid to foreign governments, reducing US tax liability.

While both can be valuable, misusing them can cause long-term tax complications. Professional expat accountants analyse your income type and residency status to determine which method offers greater savings.

Common Tax Mistakes Made by US Expats in the UK

Without specialist advice, expats often fall into traps that can trigger IRS penalties or HMRC investigations. Here are some common pitfalls:

• Not filing US tax returns while abroad. Many expats assume living overseas exempts them — it doesn’t.

• Ignoring FATCA (Foreign Account Tax Compliance Act). US citizens must report foreign bank accounts exceeding $10,000 (via Form 8938 and FBAR).

• Overlooking UK residency status. Misinterpreting the Statutory Residence Test (SRT) can lead to underpayment or overpayment of UK taxes.

• Failing to claim foreign tax credits properly. Incomplete filings can result in double taxation or missed refunds.

With expert tax services for US expats in the UK, these risks are mitigated through accurate and compliant filings.

Social Security and Pension Considerations

US expats in the UK often pay into both countries’ social security systems. Thankfully, the US–UK Totalization Agreement prevents the payment of double social security taxes. It determines where contributions are made based on your employment situation.

For pensions, the treaty outlines how distributions are taxed, typically in the country of residence. However, cross-border pension rules are complex. Accountants help ensure contributions and withdrawals are reported correctly, avoiding unnecessary tax exposure.

Business Owners and Self-Employed US Expats

Running a business as an expat introduces extra complexity. Self-employed Americans in the UK must pay both UK National Insurance and US self-employment tax, unless the Totalization Agreement covers them.

Specialist accountants structure your business efficiently to reduce exposure to both tax systems. They also ensure proper reporting of UK company income on Form 5471 (for controlled foreign corporations) and apply double taxation relief where eligible.

JungleTax’s team of experts helps expat entrepreneurs use UK business reliefs and treaty provisions while maintaining IRS compliance — a balance many general accountants miss.

How Tax Services Simplify Expat Compliance

Professional tax services for US expats in the UK do more than file forms — they deliver peace of mind. These services typically include:

• Preparing and filing dual US–UK tax returns.

• Maximising treaty benefits and double taxation relief.

• Managing FBAR, FATCA, and foreign income reporting.

• Advising on investments, pensions, and property taxes.

• Helping with IRS amnesty programmes (like Streamlined Filing).

By hiring an accountant familiar with both systems, you ensure accuracy, minimise liabilities, and stay compliant with complex international regulations.

Case Example: Avoiding Double Taxation in Practice

Consider Sarah, a US expat living in Manchester and earning £80,000 per year. Without professional advice, she faced the prospect of paying tax to both HMRC and the IRS. However, after consulting a dual-qualified tax specialist:

• Her UK taxes were credited against her US liability through the foreign tax credit.

• She claimed the Foreign Earned Income Exclusion for a portion of her income.

• FATCA reporting was handled correctly, avoiding IRS penalties.

Result: Zero double taxation and full compliance on both sides of the Atlantic.

Why Choose JungleTax for Expat Tax Services

At JungleTax, we specialise in tax services for US expats in the UK, offering tailored guidance for individuals and businesses navigating dual taxation systems.

Our experts combine deep knowledge of HMRC and IRS frameworks, ensuring you stay compliant while maximising available tax reliefs. From self-assessment to complex treaty claims, we simplify the process — so you can focus on your life in the UK without tax anxiety.

Conclusion

Double taxation doesn’t have to be part of your expat experience. With expert tax services for US expats in the UK, you can confidently file returns, leverage the US–UK tax treaty, and minimise liabilities.

Whether you’re working, retired, or running a business, professional guidance ensures that you remain compliant and financially protected.

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Ready to simplify your US–UK taxes and avoid double taxation? Contact JungleTax today at hello@jungletax.co.uk or call 0333 880 7974 to speak with our specialist expat tax accountants.