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US Taxes for Americans in the UK: FBAR, FEIE, the Treaty and Catching Up (2026 Guide)
Who this guide is for: Americans in the UK, and British founders selling to the US
Moving to the UK does not end your relationship with the IRS. A US citizen or green-card holder files a US return on worldwide income every year, wherever they live, and reports foreign accounts on top of it. Most of the people who call us from London, Manchester and Edinburgh are not trying to avoid that — they simply never heard it, or heard it years after they moved. This guide lays out the US rules that actually apply in the UK, what HM Revenue & Customs (HMRC) side of the picture means for the US return, and how to catch up if you are behind.
I am an Enrolled Agent, licensed by the US Treasury to represent taxpayers before the IRS from anywhere in the world. We work with four groups in the UK: US citizens and green-card holders working in London finance, tech and professional services; American retirees and long-settled families across England, Scotland, Wales and Northern Ireland; dual US-UK citizens — including accidental Americans — who have never filed a US return; British founders, consultants and agencies who want a US LLC, EIN and US bank account to bill American clients. This is general information, not individual advice.
The US-the UK tax treaty and totalization: what they do and do not do
The US-UK income tax treaty is in force and is one of the most detailed in the US treaty network; it assigns primary taxing rights on pensions, wages, dividends and gains but does not remove the US citizen's obligation to file.
The US-UK totalization agreement is in force, so an American working in the UK generally pays Social Security into only one system — which one depends on who employs them, for how long, and whether they are self-employed.
The single most common misunderstanding we correct: a treaty never removes the obligation to FILE. It changes how specific income types are taxed, and the saving-clause in every US treaty lets the IRS tax its own citizens as if most of the treaty did not exist.
FBAR, FATCA and the accounts you have in the UK
FBAR applies to UK accounts at Barclays, HSBC UK, Lloyds and NatWest and every other British bank — including ISAs and Premium Bonds — once the combined high balance of all foreign accounts crosses the reporting threshold.
FATCA (Form 8938) is a second, separate report with higher thresholds for people living abroad; missing one and not the other is common and fixable. Both are informational — no tax is due on the form itself — but the penalties for skipping them are the largest in the expat rulebook.
FEIE vs. Foreign Tax Credit in the UK
The Foreign Earned Income Exclusion covers wages earned while a bona fide resident of the UK or physically present abroad long enough; it does not touch US-source income, UK rental income, pensions or investment income.
UK tax on employment income is generally comparable to or higher than US tax, so the Foreign Tax Credit usually carries the return and the FEIE is often the wrong tool — choosing wrong can also strand carryover credits.
The choice is not permanent, but revoking the exclusion locks you out of it for several years, so the decision should be modeled against your actual mix of wages, self-employment and investment income before the first return is filed.
Businesses, pensions and investments: the forms that surprise people in the UK
A UK limited company owned by an American is almost always a Form 5471 filing; UK funds, ETFs and most ISAs are PFICs, which is why US-connected investors are usually steered away from British collective funds.
UK pensions get treaty protection on the growth inside the plan, but employer and personal contributions, the timing of relief and the US reporting of the account itself each follow their own rules; a SIPP is still a foreign financial account reportable on Form 8938, and whether a particular scheme also triggers Form 3520 and 3520-A foreign-trust reporting is a structure-specific question, not a given.
Every one of these forms carries an automatic, per-form penalty for non-filing that has nothing to do with whether tax was owed — which is why they matter more than the 1040 itself for many long-term residents.
What HM Revenue & Customs (HMRC) taxes — and how it interacts with your US return
The UK taxes residents on a system that has been moving away from its old domicile-based rules, so long-settled Americans should not assume the old remittance-basis thinking still protects their US income from HMRC.
The UK tax year runs in April, not on the calendar year, so matching UK tax payments to the right US tax year for the Foreign Tax Credit takes deliberate bookkeeping.
We are a US firm: we handle the US side in-house and coordinate with your local accountant on the the UK side, rather than pretending to be licensed in both.
the UK-specific patterns we see
Three things come up in the UK cases more than anywhere else:
Accidental Americans — born in the US, left as children, British in every practical sense — surface constantly when a UK bank's FATCA check asks for a US Social Security Number they never had.
ISAs are sold as tax-free in the UK, and they are — for HMRC; the IRS taxes the income inside an ISA and the funds inside most ISAs are PFICs, which surprises nearly every American who opened one.
Buy-to-let landlords who kept a UK flat after moving back to the US — or kept a US home after moving to London — routinely miss that rental income is reportable in both countries with the credit, not the rent, doing the reconciliation.
Behind on US taxes? The streamlined path back
Americans in the UK who have not filed for years generally qualify for the Streamlined Foreign Offshore Procedures — three years of returns, six years of FBARs, a non-willfulness statement and no failure-to-file penalty — as long as the IRS has not already written to them.
The program is designed for exactly this population, and the non-willfulness statement is the part that needs a professional's attention — it is a signed narrative to the IRS, not a checkbox.
British founders and freelancers: reaching US clients with a US LLC
Not everyone reading this is American. Many of our the UK clients are British founders, freelancers and agencies who bill US customers and want dollar banking, Stripe and a US invoice. A non-US person can own a US LLC and get an EIN without a Social Security Number; the annual price is a Form 5472 information return and a pro-forma 1120, and the reward is US market access without a US tax return on the owner's worldwide income in most single-owner setups.
The trap is doing it halfway — forming the LLC and skipping the 5472, which carries its own automatic penalty.
the UK cities we serve
We work with clients in London, Manchester, Edinburgh, Birmingham, Bristol, Leeds and Glasgow and everywhere else in the UK, entirely by video call, secure portal and e-signature, on US hours and the UK hours.
Frequently Asked Questions
Do I have to file US taxes if I live in the UK?
Yes. US citizens and green-card holders file on worldwide income every year regardless of where they live; the treaty and the FEIE reduce the tax, not the filing duty.
Do my the UK bank accounts need an FBAR?
FBAR applies to UK accounts at Barclays, HSBC UK, Lloyds and NatWest and every other British bank — including ISAs and Premium Bonds — once the combined high balance of all foreign accounts crosses the reporting threshold.
Is there a US-the UK tax treaty?
The US-UK income tax treaty is in force and is one of the most detailed in the US treaty network; it assigns primary taxing rights on pensions, wages, dividends and gains but does not remove the US citizen's obligation to file.
Does the UK have a Social Security totalization agreement with the US?
The US-UK totalization agreement is in force, so an American working in the UK generally pays Social Security into only one system — which one depends on who employs them, for how long, and whether they are self-employed.
I have not filed in years while living in the UK. What now?
Americans in the UK who have not filed for years generally qualify for the Streamlined Foreign Offshore Procedures — three years of returns, six years of FBARs, a non-willfulness statement and no failure-to-file penalty — as long as the IRS has not already written to them.
Related Reading
Talk to an Enrolled Agent
This article is general information, not individual tax advice. Book a free 15-minute review or call, text or WhatsApp us to talk through your own situation.
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