Once you’ve made the decision to move from the UK to the US, you’ll be faced with an enormous amount of organising and paperwork.
For one thing, there are the logistics of your move, such as arranging visas, shipping belongings to the US, and putting other items into storage.
With all that going on, you could easily be forgiven for overlooking some important financial aspects of moving to the US, or at least giving them only cursory consideration.
In reality, however, there are myriad issues you should be thinking about as you look to transition from one financial and tax jurisdiction to another.
There are too many to list here, and too much detail is required, but here’s an overview of five of the most important issues to consider when moving to the US.
1. Understanding the US tax system
If you have read our other blog posts, you’ll be aware that we often refer to “landmines” that are easy for you to set off, and that can create all sorts of financial issues for you as an expat in the US.
The primary cause of such landmines is the US tax system and the IRS’s approach to expat financial arrangements.
Furthermore, it’s easy to create a problem for yourself and remain in happy ignorance until the IRS drops you a line.
Some of the basic points you should be aware of as a newly arrived expat include:
- The US system requires you to file a tax return each year, and it is your responsibility to make sure you do so.
- While the UK tax year runs from 6 April to 5 April, the US tax year follows the calendar year from 1 January.
- Taxes work on at least two levels – federal and state. Taxes can vary from state to state, sometimes markedly. You will occasionally encounter additional taxation by city.
There are also specific reporting requirements for UK and any non-US assets. You can read about them in the next section.
2. Taxation reporting on your UK financial assets
In our experience of working with many UK expats in the US, there’s a temptation to forget about UK assets when you move, and adopt an “out of sight, out of mind” attitude towards them.
However, while they may be out of sight for you, it’s a safe bet that the IRS will not take such a laissez-faire attitude towards them.
At the very least, you need to be aware of three acronyms, what they mean, and how they can affect you.
1. FBAR – Foreign Bank Account Reporting
If you keep bank accounts, investments, or pensions in the UK or any country outside the US, you must report them to the US tax authorities if their total aggregate value exceeds $10,000 at any point in the year.
2. FATCA – The Foreign Account Tax Compliance Act
There are a raft of informational forms that flow from FATCA that relate to the ownership of and interest in non-US bank accounts, investment accounts, retirement accounts, trusts, partnerships, businesses and collective investments.
Missing these forms can result in significant penalties accruing (often starting at $10k per form per year. and statute-of-limitations issues.
PFICs – Passive Foreign Investment Companies
The scourge of regular expats!
Most non-US collective investments (think: mutual funds, ETFs, OEICs, unit trusts, investment trusts) are classified by the US as PFICs. This means two things:
- Onerous annual reporting is required for each individual PFIC. One portfolio holding could mean 10 ETFs and, therefore, 10 Form 8621s.
- Likely punitive taxation.
We frequently see the PFIC rules catch out Brits who maintain ISAs while in the US.
For those who undertake some pre-immigration planning, the advice is often to ditch the PFICs, but there are other options, such as making timely elections to avoid the worst tax outcomes. Either way, advice is critical.
Find out more: Passive Foreign Investment Companies
3. What to do with your UK property
As it may well be your most valuable asset, deciding what to do with your UK property should be a priority.
Your decision will be driven in part by your future plans.
If you intend to return in the short to medium term, you may want to consider creating a UK-based income stream by renting out your property while you are abroad.
The double-taxation treaty between the UK and the US – which has important implications for your financial arrangements – means the rental income will likely only be taxed in the UK. However, you will also have to report it on your US tax return, with the double-taxation treaty mitigating the risk of you paying tax twice.
If you sell your UK property while a resident in the US, then it is likely that you will be required to submit a non-resident Capital Gains Tax return to HMRC within 60 days of selling the property.
4. Managing your UK pensions
After your property, your accrued UK pension funds are likely to be the largest asset you own.
Because of that, it’s important not to ignore your funds in the belief that they will continue to grow in value until you need to access them.
Clearly, what you do with them will depend largely on your long-term plans and financial objectives.
Ultimately, understanding how these accounts will be treated and the reporting requirements if you leave the US will ensure you take the right steps to secure the best outcomes.
Find out more: Can I transfer my UK pension to the US?
5. Your estate planning arrangements
Both the US and the UK impose either an estate tax or an Inheritance Tax on worldwide assets with a top rate of 40%.
However, there is a significant difference in the threshold at which this tax applies. The UK exemption is £325,000 (for the 2025/26 tax year and currently frozen until at least 2031), plus £175,000 for property valued at less than £2 million.
In contrast, the US exempts roughly $13.99 million (2025) per individual.
Understandably, it can be highly advantageous to keep this difference in mind when making your legacy arrangements. Your worldwide estate – not just your UK situs assets – will likely remain subject to UK IHT for 10 years after you leave the UK, so please take this into account. Your UK assets will likely always be subject to UK IHT, regardless of how long you live outside the UK.
It’s also important to review your will arrangements and the assets you have in UK-based trusts, as these could be affected by you becoming a US resident.
We recommend seeking expert advice before restructuring your arrangements.
Find out more: Estate planning for British expats in the US
Get advice
As you can appreciate, these five issues alone present a lot to think about and plan for in your move from the UK to the US.
Furthermore, that’s all on top of the numerous logistical issues related to your move, such as finding a new job, securing housing, and arranging schooling for your children.
Then there are matters relating to your financial planning in the US, including your pension arrangements, investment portfolio, and tax planning.
If you’re looking to move to the US or have recently done so, it’s important to get expert advice and guidance on your financial planning arrangements from an advice company experienced in helping expats avoid potential landmines.
Get in touch
As you have probably noted from this article, expert advice is essential when it comes to the financial arrangements related to your move to the US and becoming an expat.
If you would like to talk about your own arrangements, please get in touch to arrange an exploratory Zoom call to talk through your options.
Please note
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