Moving from the US to the UK: A checklist for Americans looking to relocate

When you move from the US to the UK, there’s a lot to consider. You might have to move large amounts of money, you’ll need to navigate an unfamiliar tax system which has a few possible pitfalls, and you’ll be immersed in a new culture that can feel surprisingly different to what you’re used to back home.

We recently hosted a webinar with a panel of currency, tax and culture experts from our network which you can view here:

In this article, we’ve summarised all the expert insights from the webinar, including the essentials of currency exchange, taxation and adjusting to expat life which will be helpful whether you’re considering moving to the UK, you’re in the process of moving, or you’ve recently relocated.

Navigating currency exchange

What is the most effective way for expats to transfer large amounts of money from the US to the UK, avoiding high fees?

It’s important to be aware of the inherent risks involved with moving large amounts of money abroad, as FX is a volatile market that moves nonstop and is impacted by various national and global events.

If you’re moving abroad from the US to the UK, an FX expert will be able to analyse the market for you over the period you’re planning to move, and work to identify where the market might shift and where issues may arise for you.

Of course, there will always be the possibility of Black Swan events which can't be predicted over the long term, such as wars or pandemics, but working with an expert will ensure these are managed as best they can be as they arise.

When it comes to the physical movement of funds from the US to the UK, there are three main ways to move money internationally: banks, brokers and apps. These all have positives and negatives.

Banks are typically the worst of the three options. They’re expensive, tend to be poor in terms of service, and you typically won’t receive much care and attention for your case.

Apps on the other hand, are automated, clever and easy to use. However, compliance issues will arise when you're sending larger sums of money (upwards of $10,000) and flags, sanctions and stops on the movement of your funds can occur. This is where apps fail, as you can't call them for help.  

When you work with a dedicated expert in currency exchange, you’ll get a high touch, one-to-one service from someone that understands your situation and can react to any issues that arise.

In summary, if you’re moving small amounts of money, currency exchange apps are great. But when you move large amounts, you’ll want to know where your money is at all times.

This is when it’s time to speak to a consultant as, in recent years, compliance has become far stricter in order to combat money laundering, and banking services and international payments haven’t kept pace. When you work with an expert, you’ll have peace of mind that your money is getting from the US to without any friction or stress.

Understanding your US and UK tax obligations

What are the key tax responsibilities in both countries for Americans moving to the UK?

The most important thing to understand is that when you move to the UK from the US, your obligations to the IRS don't go away. As a US citizen, you will still be obligated to file US tax returns and declare your worldwide income in the US. You will also potentially have an ongoing obligation to file a state tax return.

On top of this, you might have some new US filing obligations depending on your circumstances. For example, once you have assets overseas such as foreign bank accounts, you will have to complete a form known as an FBAR each year. There will also be additional forms to complete depending on what overseas interests you might have, for example, overseas trusts and non-US companies. If you don’t submit these forms on time to the IRS, significant penalties could apply.

As you’ll be aware, the tax year end for the US is the end of the calendar year. Typically, in the US, you would file your US tax return and pay your US tax by 15 April. If you’re in the UK however, you get an automatic extension on your filing deadline to 15 June, with options to extend that even further if needed. If you're going to file past 15 June, you must file for an extension, otherwise your tax return will be considered late, and penalties will apply. This is when it is essential to work with your tax advisor to estimate what your liability might be and ensure it is paid on time.

As an American in the UK, you will have a dual filing obligation, which is where international tax experts can help you navigate the unique complexities of both the US and UK simultaneously. Frustratingly, the UK tax year ends on 5 April, meaning the UK and US tax years are not coterminous, and this requires some navigation.

When you move to the UK, you're required to notify the UK tax office (HMRC) that you have an obligation to file a tax return. Unlike in the US though, not everybody in the UK is required to file a tax return. Your tax advisor will be able to help you identify whether you have income tax or capital gains tax liability here. If so, you would register yourself to file a tax return by 5 October, filing the end of the first tax year that you arrive in the UK.

If you move to the UK part way through the 2024/25 tax tear, you'd register to complete a tax return for the year to 5 April 2025. The filing deadline for that tax return will be the following 31 January 2026. Like the US, if you don't file your UK tax return and pay on time, interest charges and penalties will apply.

As an American in the UK, how can you avoid double taxation?

As an American citizen in the UK, it is recommended that you file your UK tax return and make payment to HMRC before 31 December, rather than the 31 January due date to manage the double tax risk.

To explain further, when you are paying tax in two jurisdictions, there is a risk that you will pay tax in one country and not be able to take credit for that tax in the other. This means you could end up paying 45% tax in the UK (the highest marginal rate of tax) as well as around 30% in the US, which is over 70% in tax. Therefore, you will need to manage this risk.

If you've got a UK tax liability, you will want to take credit for the UK tax you pay in your US tax return. In order to do that, it is important to pay the UK tax in the same year that the income will be taxed in the US.

For example, if you receive income which will be reported in the US tax year end 31 December 2024, that's going to fall under the UK tax year ending 5 April 2025. Even though your tax isn’t payable until January in the UK, you would want to identify the tax liability and pay before 31 December 2024 so that you can match the credit to your US tax return.

If you're unable to do that, there are opportunities to amend your return and carry it back up to one year – and if you get it wrong in your first year, a tax expert can help you fix it. Ideally though, you will want to avoid this situation, because it means having to ask the IRS for money back.

It is also important to note that the UK and the US have a comprehensive double tax agreement in place. Typically, once you are a UK resident, the UK will have the primary taxing right over all of your income. That means you will pay tax in the UK, and the US are forced to give a credit for the taxes you've paid in the UK. This the main method of avoiding double taxation on your income.

It is very important that whoever prepares your tax return is aware that you need to “treaty resource” in your US tax return. Many US-based tax professionals are well-versed in domestic rules, but don’t deal with many international taxpayers. They will often argue that US income should be treated as US income and you cannot take a foreign tax credit against it, but this is not true. If your tax advisor does not understand how to treaty resource, you need to speak to an international specialist.

Investments

Tax treatment in the UK is different when it comes to certain investments, such as mutual funds. For example, US mutual funds might be taxed at income tax rates in the UK, and lower rates of capital gains tax in the US. This creates a tax differential that you want to avoid, and this is where expert investment advice is needed.

Pensions

If you've retired and you have US pension income you need to consider the double tax treaty very carefully. Social Security from the States is only taxable in the UK and you shouldn't pay any tax on it in the US. Pension income other than social security would be taxed in the UK, then you would take a credit for the UK tax in your US tax return. The only exception to that is with lump sum payments received from your pensions, which will only be subject to tax in the country in which the pension scheme is based.

Employment income

If you're moving to the UK but you're still working for a US employer, you need to take professional advice to avoid paying US tax on your employment income. If you're performing your duties here, you should be paying the tax in the UK and taking a credit in the US.  You also need to consider claiming the foreign earned income exclusion on your US tax return.

Capital gains tax

Capital gains are taxable in the UK, not in the US. The US has to give a credit for capital gains, even if it is for US stocks. The only exception to this would be real estate. Wherever real estate is located, that country would typically retain the primary taxing right and you'll be allowed to take credit in your home country.

Request introduction to a US/UK tax specialist >

What are cultural and societal differences will Americans find between the US in the UK?

A study by Cigna 360 in 2022 found 87% of expats will experience some form of cultural shock when they move to a new country, due to different customs, language and social norms. These can lead to feelings of homesickness, with 73% of expats feeling isolated and burnt out and 98% reporting a struggle with the relocation process.

Typical struggles when US expats move to the UK include opening a bank account, renting or buying a house and navigating the medical system. They might have a tax advisor, financial advisor and immigration adviser, but there's so much that people don't have experts for when it comes to the day-to-day.

The more you can plan in advance for your cultural adjustment to UK life, the quicker you’ll settle in. Typically, it takes expats up to 18 months to adjust to a new culture. It’s important to be aware of this, be patient and allow yourself time to adjust to the changes of moving to a new country.

While the UK and US share a common language and cultural heritage, they differ significantly in many aspects including government structure, the legal system, education, healthcare. However, because many US expats have an expectation that life in the UK will be very similar to the US, they can be taken aback at the differences. By contrast, expats from Asia tend to adapt surprisingly well, because they expect it to be very different.

Here are some of the key differences Americans will find when they move to the UK:

Communication

Straightforward communication is often valued more in the US, whereas the British can come across as overly polite and indirect. UK language can also be filled with sarcastic and dry humour, and self-deprecation and irony is often integral to British communication.

Customer service

The US values customer service very highly, and Americans are used to swift resolutions, a can-do attitude and friendliness, which you don’t find everywhere in the UK. By contrast, customer service in the UK tends to be more formal and reserved.

British slang

The prevalance of British slang can affect US expats more than they expect. For example “crisps” instead of chips, “tap” instead of faucet and “biscuits” instead of cookies – it sounds small, but all these day-to-day sayings can be a constant reminder that you aren’t at home and exacerbate feelings of homesickness.

Social etiquette

Observing social norms in the UK can be essential for building meaningful connections, particularly in the workplace and with friends. For example, queueing is taken exceptionally seriously! Another example might be that when Brits greet people they can come across as quite reserved, and are less likely to engage in small talk compared to Americans.

Workplace culture

On the whole, the UK places more value on having a work/life balance than the US. UK workers don't tend to work long hours, and taking holidays is encouraged. The UK has more holiday allowance and national bank holidays than the US, and health and wellbeing is particularly in vogue in the corporate settings, where companies want to be seen as caring about employees.

Public transport

Buses and trains are more widely used in the UK and owning a car in the UK is less common than in the US. In many areas of the US, you need a car to get around, but in the UK there is a good public transport system in most areas. However, in some places public transport isn’t all that reliable and navigating getting a ticket with peak and off-peak times can feel like a minefield at first, but it just takes some getting used to.

Driving

Driving on the left-hand side of the road can take a bit of getting used to for US expats. There's also a lack of parking spaces in many cities, London specifically, and it's often expensive to park in busy locations.

Healthcare

A big difference between the UK and the US is that the UK provides free and heavily subsidised health care. While this is appealing to US expats moving to the UK, it's important to be mindful that there are likely to be long waiting lists for appointments, depending where you are in the UK. Waiting times for emergency care may also be longer than you're used to in the US. This is why private medical insurance can be a great option.

Housing

Housing in the UK can feel very different to the US. Houses will often be smaller, have narrow hallways and staircases, and less in-built storage space than typical American homes. A lot of UK homes are terraced or semi-detached, and it’s rare for them to have basements. It’s also very rare to have air conditioning in UK homes, and it can get very hot in the cities in summer.

Food and drink

British cuisine is diverse but differs significantly from American food, and a lot of US expats find themselves longing for familiar tastes like authentic Tex-Mex and ranch dressing. Drinking culture is also a lot more prevalent in the UK, with after work pub visits being common. Social gatherings around drink and food can help build relationships, and so can’t be overlooked.

Understanding the cultural and societal differences between the UK and the US is essential for your adjustment to life in the UK. When you know what differences to expect, you can prepare yourself better and start feeling at home in the UK sooner.

For more information about how to avoid culture shock when moving from the US to the UK, read our full article >

Request introduction to US/UK Cultural coach >

Watch the webinar in full

For more detailed information plus an additional Q&A with a panel of our expert partners, watch the full webinar on moving from the US to the UK here.

If you’re planning a move from the US to the UK and want to get in touch with an expert who can help with anything mentioned in this article, request a free introduction now.