For high-net-worth individuals and business owners planning a move to the UK, the excitement of relocating often overshadows one major concern: tax. Without careful planning, Americans can walk straight into costly tax traps, resulting in unexpected liabilities that could easily have been avoided.
Understanding the UK tax considerations for Americans moving to the UK is crucial. Here’s what you need to know before you book your one-way ticket, and how the right advice could save you thousands (or more) in unnecessary taxes.
The risk of liquidating assets without a plan
One of the most common mistakes Americans make is liquidating assets. For example, selling investments or real estate before or just after arriving in the UK, often to fund large purchases like a home. What seems like a smart financial move at first glance can trigger substantial UK capital gains tax.
In the UK, tax liability is determined by when you become a resident. If you sell assets after becoming a UK resident, even if you built those assets while living in the US, the UK may tax your full gain.
Key Tip:
Consider liquidating assets before becoming a UK tax resident, if possible. Alternatively, explore structuring options that allow you to access liquidity without triggering immediate tax.
| Case study: How Pre-Move Planning Saved an American Retiree £125,000An American client retiring to Scotland owned a U.S. home purchased in the 1970s that had appreciated by just under $500,000. We reviewed their exposure in both countries and advised them to sell before becoming UK resident.The result? They secured the full U.S. main residence exclusion ($500,000 tax-free), avoided approximately £100,000 in UK capital gains tax, and dodged the 8% Additional Dwelling Surcharge on their Scottish home purchase, saving more than £25,000.Total saving: over £125,000 in combined taxes and reduced professional fees through simplified compliance. |
Bringing assets into the UK (and avoiding unnecessary tax)
Until April 2025, non-domiciled individuals could rely on the remittance basis. From April 2025, this will be replaced by a four-year “Foreign Income and Gains” (FIG) regime, which allows new UK residents who have been non-residents for at least 10 years to retain foreign income and gains outside UK tax. Those already on the remittance basis may be eligible for transitional reliefs, including a 50% foreign income exemption in 2025–26 and rebasing options.
For example, poorly segregated accounts can create significant compliance burdens, as every remittance of mixed funds may require a detailed breakdown and claim.
Key Tip:
Keeping capital, income, and gains clearly separated before April 2025 (or before arrival for new movers) will help maintain flexibility and reduce costly administrative complexity in the future.
| Case study: Proactive Account Segregation Protects U.S. Client from Future UK Tax ExposureA U.S. client moving to the UK in 2026 held multiple offshore accounts containing historic savings, dividends, and investment gains. Before relocation, we mapped and separated their accounts by source, identifying which funds could be brought into the UK freely and which might trigger tax under the new regime.This proactive segregation created a clear audit trail, giving the client control over what they remit and when, rather than facing uncertainty or unexpected UK tax bills down the line. |
Options for more tax-efficient structuring
Fortunately, with the proper planning, Americans moving to the UK can optimize their tax position. Some strategies to consider include:
- Timing your move:
Moving mid-tax year can still allow you to claim split-year treatment, potentially reducing UK exposure. Timing also affects FIG eligibility. You must generally have been non-resident for 10 consecutive UK tax years to qualify. - Using offshore trusts or entities:
The rules surrounding this have also changed, and it is crucial to review what entities and structures are in place before moving and how they will be taxed in the UK. A trust arrangement is very popular in the USA, but the benefits can be eliminated in the UK through the tax regime and new rules. - Reviewing retirement accounts:
Understand how 401(k)s, IRAs, and pensions are treated differently in the UK. Distributions and investment gains may not enjoy the same protections or lower tax rates as overseas. - Pre-arrival planning windows:
Taking advantage of the time between deciding to move and actually relocating is critical. Even a few months of proactive planning can dramatically change the tax outcome.
Plan smart today (and avoid expensive mistakes tomorrow)
UK tax considerations for Americans moving to the UK are not something to leave until after you land. Many tax traps are avoidable with advance planning, but once residency begins, options become limited and costly mistakes can be permanent.
At SE Tax Professionals, we specialize in helping Americans transition to the UK smoothly and tax-efficiently. Our team works with you to build tailored strategies that protect your wealth across both borders, minimizing unnecessary liabilities. Reach out to us today to discuss your move.