Complete Tax Guide for US Expats in the UK
- UK Tax System Overview for US Expats
- Understanding UK Tax Residency & Its Impact on Expats
- UK Income Tax Rates for US Expats (2024-2025)
- How UK Taxes Compare to US Taxes for Expats
- How US Expats Can Avoid Double Taxation in the UK
- What Tax Forms Do US Expats in the UK Need?
- Need Help with Your US Expat Taxes in the UK?
Thinking of making the UK your home? Whether you’re freelancing from London or settling in with your family in Edinburgh, understanding how UK taxes work as a US citizen is key to staying compliant and minimizing stress.
This guide walks you through the UK expat tax essentials—what you owe, what’s changed, and how to stay on top of both your US and UK obligations with confidence.
What’s New for 2025–2026
Two big changes are impacting US expats in the UK:
- The remittance basis is gone: Starting April 2025, UK tax residents are taxed on all worldwide income and gains as they arise—even if the money stays offshore.
- Making Tax Digital is coming: Starting April 2026, if you earn more than £50,000 in self-employment or rental income, you’ll be required to file digitally and quarterly.
We cover both changes in detail below.
How UK Taxes Work for US Expats
The UK taxes you based on where you live, not your citizenship.
If you live in the UK and meet the rules for tax residency, you’ll pay UK tax on your worldwide income.
The US does the opposite. It taxes all citizens and green card holders on worldwide income, no matter where they live.
So if you’re a US citizen living in the UK, you’ll likely need to file tax returns in both countries.
But don’t worry—there are ways to avoid getting taxed twice. We’ll walk you through those next.
Do You Count as a UK Tax Resident?
Whether or not you’re considered a UK tax resident has a big impact on what income gets taxed.
- If you are a UK tax resident, you’ll pay UK tax on your worldwide income—that includes US wages, dividends, rental income, and more.
- If you are not a UK tax resident, you’ll only owe UK tax on UK-sourced income, such as pay from a UK job or rent from a UK property.
Your residency is determined by the Statutory Residence Test (SRT), which looks at things like:
- How many days you spend in the UK
- Whether you have a home, job, or family in the UK
- Your ties to the country
Spending 183 or more days in the UK automatically makes you a tax resident. But even if you spend fewer days, other connections—like a UK job or rental flat—could still tip the scale.
Moved mid-year? You might qualify for split-year treatment, where only the UK-resident portion of your income is taxed.
If you’re unsure where you stand, we can help you work through the SRT step by step.
| Residency Factor | What It Means for You |
|---|---|
| 183+ days in the UK | You’re automatically a tax resident |
| <183 days + UK ties (job, family, home) | You may still be a tax resident |
| No UK ties + few UK days | Likely not a resident |
| Moved mid-year? | You might qualify for split-year treatment (only UK income is taxed for part of the year) |
How UK Taxes Compare to US Taxes for Expats
The UK and US tax systems differ in some major ways, making it important for expats to understand both.
US vs. UK Tax Breakdown
| Tax Factor | UK | US |
| Tax System Type | Residency-based | Citizenship-based |
| Top Income Tax Rate | 45% (48% in Scotland) | 37% federal + state taxes |
| Social Security | NICs: 12% on earnings | Social Security & Medicare: 7.65% |
| VAT/Sales Tax | VAT: 20% | Sales tax: 0%–10% (varies by state) |
Based on this table, here are some key differences to keep in mind:
- UK rates are higher: A 45% top rate (48% in Scotland) vs. the US’s 37% federal max, though US state taxes (e.g., 13.3% in California) can push totals higher.
- Benefits included: UK taxes fund the NHS and robust public services; US taxes don’t guarantee healthcare.
- No provincial taxes in the UK: The US layers federal and state taxes, while the UK uses a central system (except Scotland, which has its own rules).
What Taxes Will You Face in the UK?
Living in the UK means adjusting to a different tax landscape. As a US expat, here are the main taxes you’ll likely encounter:
- Income Tax – Taken out of your paycheck automatically (if employed), or reported via Self Assessment if you’re self-employed or earn rental income.
- National Insurance (NICs) – Like Social Security, these contributions help fund healthcare and pensions.
- Capital Gains Tax (CGT) – Applies when you sell investments, property, or other assets for a profit.
- Value-Added Tax (VAT) – A 20% tax built into the price of most goods and services.
- Council Tax – A local tax based on your home’s value and the services provided in your area.
One thing to watch out for: The UK tax year runs from April 6 to April 5, not the calendar year you might be used to in the US.
Want a side-by-side comparison of how the UK and US tax systems stack up?
Read our full guide: UK Taxes vs. US Taxes – What Expats Need to Know
Get the Free Download That Makes Filing Taxes Simple
2025 Income Tax Rates in the UK
If you’re employed in the UK, your income tax is usually handled automatically through the Pay As You Earn (PAYE) system. This means your employer takes tax directly from your paycheck before you even see it—no need to file anything yourself in most cases.
You’ll also see National Insurance Contributions (NICs) deducted from your pay. These are similar to Social Security and Medicare in the US and help fund UK benefits like healthcare and pensions.
If you’re self-employed or earn rental income, you won’t go through PAYE. Instead, you’ll report your income and pay your taxes directly by filing a Self-Assessment Tax Return each year.
UK Income Tax Rates (England, Northern Ireland, Wales)
| Earnings in GBP | Rate Applicable to Income Level (%) |
| £12,570 | Tax-free |
| £12,571 to £50,270 | 20% |
| £50,271 and £125,140 | 40% |
| Over £125,140 | 45% |
UK Income Tax Rate for Scotland
| Earnings in GBP | Rate Applicable to Income Level (%) |
| Up to £12,570 | Tax-free |
| £12,571 to £14,876 | 19% |
| £14,877 to £26,561 | 20% |
| £26,562 to £43,662 | 21% |
| £43,663 to £75,000 | 42% |
| £75,001 to £125,140 | 45% |
| Above £125,140 | 48% |
Note: The tax-free personal allowance (£12,570) shrinks by £1 for every £2 of income over £100,000, disappearing at £125,140. For example, earning £110,000 reduces your allowance to £7,570.
The End of the Remittance Basis (April 2025)
In previous years, UK tax residents could choose the remittance basis—only paying tax on foreign income brought into the UK. That option is gone.
As of April 2025:
- Most residents are taxed on all income and gains, regardless of where they arise or whether they’re remitted to the UK.
- New residents (non-residents for 10 years) may qualify for a 4-year Foreign Income and Gains (FIG) exemption, but:
- You’ll lose your Personal Allowance and Capital Gains Tax exemption if you claim it.
- The clock starts your first tax year of UK residency.
This shift means many expats will face higher UK tax bills and more complex reporting.
How US Expats Can Avoid Double Taxation in the UK
US citizens must file US tax returns even while living in the UK. This could lead to double taxation—being taxed twice on the same income. Fortunately, there are ways to avoid this.
- Foreign Earned Income Exclusion (FEIE): Excludes up to $130,000 of foreign-earned income in 2025. Qualify via:
- Bona Fide Residence Test: Live in the UK for a full tax year (e.g., January 1–December 31).
- Physical Presence Test: Spend 330+ days abroad in any 12-month period.
- Foreign Tax Credit (FTC): Gives a dollar-for-dollar credit for UK taxes paid. For example, if you pay £20,000 in UK tax, subtract that from your US bill.
- US-UK Tax Treaty: This covers pensions, dividends, and interest—e.g., UK pensions are taxed only in the UK for residents.
- The US-UK Totalization Agreement prevents double social security taxes. Working in the UK for under five years? Pay NICs only. Over five? You might switch to US contributions.
Making Tax Digital: What to Know Now
What Is Making Tax Digital (MTD)?
Starting 6 April 2026, HMRC is requiring many taxpayers to:
- File taxes quarterly
- Use MTD-compliant software
- Keep digital records
This affects:
- Self-employed individuals
- Landlords
Who’s impacted and when:
| Income from Self-Employment + Property | MTD Start Date |
|---|---|
| Over £50,000 | April 2026 |
| £30,000–£50,000 | April 2027 |
| (Likely) £20,000–£30,000 | April 2028 |
You’ll no longer file one annual Self Assessment return. Instead, you’ll:
- Submit quarterly updates
- File an End of Period Statement
- Submit a Final Declaration
HMRC will notify you if you’re enrolled in Making Tax Digital after reviewing your 2024–2025 return—don’t ignore the letter as penalties may apply. Get ahead of MTD requirements with our complete guide covering software obligations, compliance deadlines, and everything UK expats need to know.
What Tax Forms Do US Expats in the UK Need?
Key forms for Americans living in the UK include:
UK Forms
- Self Assessment Tax Return (SA100): For self-employed expats, landlords, and anyone earning £150,000+
- Deadlines:
- Paper: October 31
- Online: January 31
- Deadlines:
US Forms
- Form 1040: Standard US tax return
- Deadline: April 15 (June 15 extension for expats)
- FBAR (FinCEN Form 114): If you have foreign accounts totaling over $10,000
- FATCA (Form 8938): If foreign assets exceed $200,000 (single) or $400,000 (married, abroad)
Need Help with Your US Expat Taxes in the UK?
We get it—navigating two tax systems at once isn’t easy. But you don’t have to do it alone.
At Greenback, we handle both your US and UK taxes under one roof. Our team includes US tax experts and in-house UK Chartered Accountants, so you can trust that nothing slips through the cracks—no matter which side of the Atlantic you’re reporting from.
Contact us, and one of our customer champions will gladly help. If you need precise advice on your tax situation, you can also click below to get a consultation with one of our expat tax experts.
