US and UK Tax Specialists for American Citizens Explained

Understanding the Dual Taxation Challenge

Living abroad brings excitement and opportunity, but it also creates financial complexity. If you’re an American living in the UK, you face one of the most intricate tax systems in the world. The United States taxes its citizens on worldwide income, even if they live overseas, while the UK taxes residents on income earned within its borders. That’s why US and UK Tax specialists for American citizens play an essential role. They help dual citizens manage tax obligations across two countries, ensuring compliance and avoiding double taxation.

For example, imagine you’re a YouTube creator based in London but earning ad revenue from US audiences. Both the IRS and HMRC expect you to report that income, even though it’s the same source. Without proper tax coordination, you could pay twice. Expert tax specialists prevent that through strategic planning and treaty application.

Why Dual Citizens Face Unique Tax Obligations

Most countries use a residency-based taxation model, but the United States stands out. American citizens, even if they live abroad for decades, must file US tax returns annually. The UK, on the other hand, taxes residents based on residency status and domicile.

This overlapping system leads to confusion. Dual citizens often struggle with questions like:

• Which income does each country tax?

• How do I report foreign income?

• Can I offset taxes paid in the UK against my US return?

That’s where expat tax accountants bridge the gap. They apply complex tax treaties, foreign income exclusions, and credit mechanisms to keep you compliant while minimising tax exposure.

The Importance of the US–UK Tax Treaty

The US–UK tax treaty exists to prevent double taxation. It outlines which country has taxing rights over specific types of income—like dividends, pensions, or self-employment earnings.

However, the treaty isn’t automatic. You must apply its provisions correctly on your tax return. For example, if you earn UK employment income, the treaty allows you to claim a foreign tax credit in your US filing to offset taxes already paid to HMRC.

US and UK Tax specialists for American citizens understand how to interpret and apply these clauses. They ensure that every credit, exclusion, and deduction is adequately documented. Without this knowledge, dual citizens often overpay or risk non-compliance.

FATCA and Foreign Account Reporting

One primary reason Americans abroad struggle with compliance is FATCA—the Foreign Account Tax Compliance Act. This law requires US citizens to report foreign financial accounts exceeding $10,000 at any point in the year.

Even if your accounts are in the UK and used for everyday living, FATCA still applies. You must also file the FBAR (Foreign Bank Account Report) through the US Treasury’s FinCEN.

Many expats discover FATCA requirements only after receiving penalties. That’s why professional expat tax accountants are vital—they manage FATCA filings, verify account thresholds, and ensure data accuracy before submission.

Real-life example: One American entrepreneur in Manchester had £60,000 spread across business and personal UK accounts. Unaware of FATCA, she failed to report for 2 years. With help from JungleTax’s cross-border team, she entered the IRS streamlined filing program and avoided heavy penalties.

Managing Income Streams Across Borders

Americans in the UK often have diverse income sources, including employment, self-employment, investments, and rental properties. Each type of income is subject to different tax treatment in both countries.

For example:

• Employment Income: Taxed in the country where you work, but reportable to both the IRS and HMRC.

• Self-Employment Income: Subject to both UK National Insurance and US self-employment tax unless treaty exemptions apply.

• Investment Income: Dividends, capital gains, and interest often require coordination between US and UK filings.

Without a professional guiding you, you might misreport income or miss deductions. JungleTax’s US and UK Tax specialists for American citizens ensure your filings align perfectly with both systems, saving you time and money.

How Double Taxation Relief Works

Double taxation relief ensures you don’t pay taxes twice on the same income. You can claim relief in two primary ways:

1. Foreign Tax Credit (FTC): Offsetting taxes paid to HMRC against your US tax liability.

2. Foreign Earned Income Exclusion (FEIE): Excluding a portion of foreign income (up to $126,500 for 2024) from US taxation.

Choosing between them depends on your circumstances. FEIE works best if your income comes purely from employment, while FTC is ideal for mixed income types or when UK taxes exceed US rates.

Your tax specialist can calculate which method provides maximum benefit, ensuring both HMRC and IRS obligations are met efficiently.

Retirement and Pension Planning for Dual Citizens

Retirement planning becomes complex for Americans in the UK. UK pension schemes—such as SIPPs or employer contributions—can trigger unexpected US tax consequences. The US may tax pension growth annually, even if the UK defers it until withdrawal.

Professional guidance ensures proper reporting and the application of treaties. For instance, the US–UK treaty allows specific relief for recognised pension schemes. However, this must be declared using the correct forms, such as Form 8833, to claim treaty benefits officially.

JungleTax regularly helps dual citizens align their pension and investment strategies with compliant tax structures that protect long-term financial goals.

Real-Life Example: Dual Citizen Freelancer

Consider an American freelancer living in London who earns income from UK clients and US brands. She invoices in GBP and USD, holds accounts in both countries, and uses PayPal for international payments.

Without structured accounting, her financial records quickly become disorganised. After joining JungleTax, our cross-border experts created a unified bookkeeping system linking her UK and US income streams. We then applied foreign tax credits and ensured compliance with FATCA. The result? She saved 22% in total tax liability and avoided filing errors.

This kind of transformation illustrates how expert dual citizenship tax filing turns confusion into clarity.

The Risks of Ignoring Compliance

Some expats assume they can “fly under the radar,” especially if they pay UK taxes. Unfortunately, that’s risky. The IRS and HMRC share financial data under international agreements, allowing non-filers to be easily flagged.

Penalties for failing to file US taxes or FBARs can be severe, often exceeding $10,000 per account per year. That’s why hiring US and UK Tax specialists for American citizens isn’t a luxury—it’s protection.

Why JungleTax Is the Right Partner for Dual Citizens

At JungleTax, we specialise in cross-border tax compliance for American expats. Our team combines local UK expertise with US tax knowledge to deliver seamless, compliant, and cost-efficient tax management.

We help you:

• Avoid double taxation.

• Stay compliant with FATCA and FBAR requirements.

• Optimise foreign income exclusions and credits.

• Plan long-term tax-efficient strategies.

Our goal is to make expat taxation simple, transparent, and stress-free. Whether you’re a freelancer, entrepreneur, or employee, we tailor our solutions to your exact needs.

Conclusion: Simplify Cross-Border Tax with Confidence

Navigating dual taxation as an American in the UK can feel daunting, but you don’t have to do it alone. US and UK Tax specialists for American citizens ensure compliance, prevent overpayment, and protect your financial future.

With the proper guidance, you can focus on living and working abroad while experts handle the complexities.

For expert help with your taxes, contact JungleTax today at hello@jungletax.co.uk or call 0333 880 7974.