For individuals in the US, the tax year follows the calendar year, ending on 31 December.

This means that now is the time to plan proactively, make use of any allowances that expire at the end of the year, and minimise your tax liability.

It’s also a heads-up for UK expats in the US. Tax planning and managing the interaction between your US and UK-based assets can be complex, but there are opportunities you can exploit with simple planning.

Here are eight tax planning tips that give you an overview of some of these issues and opportunities.

Clearly, how these affect you will depend on your personal circumstances and objectives. Always get advice from a tax planning expert before you act.

1. Maximise your US retirement contributions

Contributing to your employer-sponsored 401(k) retirement savings scheme can reduce your Income Tax liability. You can contribute up to $23,500 in the 2025 tax year and if you’re over 50 years old, you can make an additional catch-up contribution of up to either $7,500 or $11,250 depending on your exact age.

Investments within Individual Retirement Accounts (IRAs) grow tax-deferred, with no tax payable on dividends, interest, or capital gains. Furthermore, contributions may be tax-deductible in the year you make them.

While contributions to a Roth IRA are not tax-deductible, withdrawals can be tax-free. That makes them a potentially attractive option if you believe you will be in a higher tax bracket after you retire.

The maximum annual combined contribution across both IRAs (Traditional and Roth) is $7,000 ($8,000 if you are over 50) in 2025.

2. Use tax-loss harvesting to reduce the tax charge on your capital gains

By selling an investment at a loss, you can offset either gains you may have already realised or those that you make in the future. This is known as “tax-loss harvesting”. This technique is appropriate in taxable (i.e. non-retirement) accounts only.

Clearly, financial markets have provided excellent returns this year, so you may struggle to offset all the gains you may have crystallized since January 2025.

However, it may be possible to reduce what you owe by realising any losses before the end of the year.

3. Start preparing any necessary foreign asset reporting requirements

If the aggregate balance of all your non-US accounts exceeds $10,000 at any time in the US financial year, you must file Form 114, Report of Foreign Bank and Financial Accounts, commonly referred to as “FBAR”.

You should also check whether you need to complete Form 8938 if you hold specific foreign assets with a value exceeding $50,000 at the end of the year or $75,000 at any point during the year ($100,000 or $150,000 if “married filing jointly”)

The end of the US tax year is a good prompt to confirm the value of assets, check your paperwork is up to date, and start thinking about these and any other forms you may read about here.

Find out more: Foreign asset reporting

4. Review your UK Statutory Residency Test

If you travel frequently to UK and/or you stay there extensively, then you should confirm your UK residency status each year using the Statutory Residence Test (SRT). If you can, you want to avoid being a UK tax resident (as then some additional taxation and compliance could be required).

You should ensure that you maintain a record of workdays, visits to the UK, and your home ties if you travel between the two countries.

However, if you have recently moved from the UK to become a US resident, the end of the US tax year is the time to determine if you qualify for split-year treatment under the SRT to avoid double taxation.

Find out more: The UK Statutory Residency Test – How it works and how you can stay compliant

5. Consider bringing forward UK tax payments to maximise your US Foreign Tax Credits

If you still have UK earnings, UK tax payments can be credited against your US tax liability in the same calendar year.

These earnings could include rental income and any substantial capital gains.

Because of this, you may want to consider making a voluntary UK tax payment by 31 December so that you can declare this on your US tax return.

6. Review your UK-based investments

Holdings in Passive Foreign Investment Companies (PFICs), such as UK-based ETFs, mutual funds, investment trusts and OEICs, can create punitive tax treatment in the US.

Likewise, ISAs do not have the same tax efficiency in the US as they do in the UK, and all income and gains will be taxable on your US return (and they are usually full of PFICs).

It’s sensible to get valuations of these assets as soon as you can, and consider restructuring them into US holdings.

Find out more: Passive Foreign Investment Companies (PFICs)

7. Check the tax deferral status if you are making any UK pension contributions

If you’re still contributing to a UK pension while you are in the US, you should confirm whether you’re entitled to US tax deferral under treaty relief.

You will typically need to complete Form 8833 and file this with your US tax return.

Find out more: What to do with your UK pensions once you settle in the US

8. Ensure you are correctly reporting any UK property Income

If you rent out a property in the UK, you will need to report the income you earn in both the UK and the US.

The US-UK double taxation treaty may prevent you from paying tax twice on this income, as you can claim foreign tax credits in the US. However, you will have to ensure you report this correctly in both countries and account for different reporting periods.

Get in touch

Expert advice is essential when it comes to your financial arrangements and year-end tax planning.

If you are a British expat living in the US or looking to make the move in the near future, get in touch to arrange an exploratory Zoom call to discuss your options.

Please note

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