Figures relate to tax year 2025 (US) · 2025-26 (UK)
Cross-border tax advice is usually retrospective: someone arrives, files, and discovers what they should have done. The move itself is the one moment when nearly every lever is still available. This is what we work through with clients heading east.
1. Break state residence properly
Leaving the US ends nothing at state level unless you make it. States tax on domicile as well as residence, and California, New York and Virginia in particular read a retained driver's licence, voter registration or storage unit as evidence you intend to return.
Most states also ignore the federal reliefs that protect expats, so lingering state residence means real tax on income the federal return excludes. Surrender the licence, change the registrations, file the final part-year return. It is an afternoon's work before you go, and a dispute if reconstructed three years later.
2. Decide what to sell while you are still American-only
Once you are UK resident, UK capital gains tax applies to disposals and the interaction gets complicated. Highly appreciated US holdings, concentrated stock positions and anything you were going to rebalance anyway are worth reviewing before departure, while only one system is looking.
The reverse also applies: US-domiciled funds you keep are fine for US purposes, and buying UK funds after arrival walks straight into the PFIC rules. Set the portfolio up before you land.
3. Understand the UK arrival rules
UK residence is determined by the statutory residence test, a day-count-plus-ties framework that is more mechanical than most people expect. Arrive at the right point in the UK tax year and split-year treatment can apply, taxing you as resident only from arrival rather than the whole year.
The UK tax year running to early April, against the US calendar year, means a mid-year move straddles two of everything. Timing the arrival date is a genuine planning decision, not an administrative detail.
4. Line up the paperwork you will need
- A National Insurance number, and a coverage certificate if you are self-employed, to avoid paying into both social security systems.
- US bank access that survives a foreign address — some institutions restrict accounts once you move.
- Records of cost basis for everything you hold; reconstructing it later from a UK platform is painful.
- A view on pensions: employer scheme, SIPP, and how existing 401(k)s and IRAs will be treated.
5. Expect two returns, and plan the order
From the year of arrival you will likely file in both countries. The figures are not independent: UK tax paid feeds the credits claimed on the US return, and getting the sequence right is what keeps the same income from being taxed twice.
None of this is a reason not to move. It is a reason to spend an hour on it before you do — the difference between planned and retrospective is usually measured in thousands.
Not sure where you stand?
Tell us what you hold across the US and UK. We come back with the scope and a fixed fee in writing, at no cost.
Get in TouchPrimary sources
Official guidance from the IRS, FinCEN and GOV.UK. Thresholds and rates on those pages are updated annually — check the current tax year before relying on a figure.
