Minimising US and UK Tax When Moving to the UK
Minimising tax when moving to the UK comes down to what you do before you land. Sell appreciated assets while still a non-resident, claim the 4-year FIG regime, and coordinate US treaty relief early. Getting the timing wrong can cost a six-figure sum in avoidable tax.
By the TaxYork Cross-Border Tax Team — reviewed by a US-UK dual-qualified adviser (CPA / Enrolled Agent).
Why does pre-arrival planning matter so much when moving to the UK?
The single biggest lever for minimizing tax when moving to the UK is the calendar. Actions taken before you become UK tax resident sit outside the UK net; the same actions a day later can trigger UK income tax or capital gains tax. Once you are a resident, most of the cheap options close.
UK residence is not a matter of choice or paperwork. It is decided mechanically by the Statutory Residence Test (SRT), and the date you become resident sets the clock on every relief below. Plan around that date, not around your flight.
How the Statutory Residence Test decides your arrival date
The SRT works through three stages in order: automatic overseas tests, automatic UK tests, and then the sufficient ties test. Spend 183 days or more in a UK tax year, and you are automatically resident, with no exceptions. Spend fewer, and the sufficient ties test can still catch you on far fewer days,s depending on family, accommodation, work, and prior-presence ties.
The UK tax year runs from 6 April to 5 April, not the calendar year. That mismatch with the US calendar year is the root of most cross-border errors, so pin your residence start date precisely using HMRC's SRT guidance before you commit to any transaction. Our guide to the Statutory Residence Test walks through each tie in detail.
What is the 4-year FIG regime, and can you claim it?
From 6 April 2025, the UK abolished the old remittance-basis non-dom regime and replaced it with the 4-year Foreign Income and Gains (FIG) regime. If you qualify, your foreign income and gains are free of UK tax for your first four years of residence, and you can bring that money into the UK without charge and without limit.
You qualify only if you become a UK tax resident after at least 10 consecutive tax years of non-residence. The relief covers the tax year you arrive in plus the following three, and it cannot be extended. Read the eligibility conditions on GOV.UK's FIG guidance before relying on it, and see our full breakdown of the 4-year FIG regime.
The trade-off: personal allowances
The FIG regime is not free. In any year you claim it, you lose your UK income tax personal allowance and your capital gains tax annual exempt amount. For a new arrival with substantial foreign income, the exchange is overwhelmingly worthwhile; for someone with modest foreign income, it may not be. Model both positions each tax year rather than claiming on autopilot.
Former remittance-basis users: TRF and rebasing
If you were already a UK non-dom under the old rules, two transitional reliefs matter. The Temporary Repatriation Facility (TRF) lets you bring previously untaxed foreign income and gains into the UK at 12% for 2025/26 and 2026/27, rising to 15% in 2027/28, after which it disappears from 6 April 2028. Separately, qualifying former non-doms can rebase non-UK assets to their market value on 5 April 2017 on disposal. Details are set out in the government's reform of non-dom taxation paper.
How do US citizens stay compliant while cutting UK tax?
The US taxes its citizens and green-card holders on worldwide income for life, wherever they live. Moving to the UK does not switch that off. You will file both a US federal return and a UK Self Assessment, and the job is to make sure the same dollar of income is not taxed twice.
The two coordinating tools are the foreign tax credit and the US-UK tax treaty. Used together, they usually eliminate double taxation, but only if you sequence the income correctly across two misaligned tax years.
The foreign tax credit and the treaty
UK tax paid on UK-source or FIG-excluded income can generally be credited against US tax on the same income via Form 1116. The mechanics and limitations are on the IRS foreign tax credit page, and we cover the choice between credits and exclusions in our foreign tax credit guide. Where the credit alone leaves a gap, the treaty allocates taxing rights and can resolve the mismatch. The catch is timing: the UK's 6 April year-end rarely lines up with the US's 31 December year-end, so a gain taxed by one country in one year can meet the other country's tax in a different year, straining the credit. This is why disposal dates are chosen rather than left to chance.
The ISA and PFIC trap
A UK ISA is tax-free to HMRC but fully taxable to the IRS, and most UK funds held inside one are Passive Foreign Investment Companies (PFICs). PFICs carry punitive US tax and heavy annual reporting on Form 8621 — see the IRS Form 8621 guidance. For a US person, an ISA stuffed with UK unit trusts can be the worst of both worlds. Hold US-domiciled funds or individual securities instead, and think hard before opening any UK pooled investment. Our PFIC guide for US expats explains the reporting burden in full.
Which assets should you sell before becoming a UK resident?
Appreciated non-UK assets are the classic pre-arrival target. Sell them while you are still a UK non-resident, and any gain will fall entirely outside UK CGT. Wait until after your residence start date, and unless the gain is FIG-covered and correctly claimed, HMRC can tax it.
This "rebasing by sale" resets your acquisition cost to today's value, shrinking the future UK gain. For US persons, the same sale is a US taxable event, so the two systems must be balanced — but the UK saving is often the larger prize.
Action
Before UK residence
After UK residence (no FIG claim)
Sell appreciated US shares
No UK CGT; US tax only
UK CGT plus US tax, credit timing risk
Crystallise foreign fund gains
Outside the UK net
UK CGT on the full gain
Bring foreign cash into the UK
Clean capital, no charge
May be taxable if it represents income/gains
Open a UK ISA (US person)
Avoid — PFIC risk
Avoid — PFIC risk
Foreign income vs foreign gains: two different clocks
Foreign income and foreign gains are treated separately. The table below shows how each is handled upon arrival, depending on whether you claim the FIG regime.
Item
With a 4-year FIG claim
Standard arising basis
Foreign employment/investment income
UK tax-free for 4 years
Taxed as it arises
Foreign capital gains
UK tax-free for 4 years
UK CGT as realized
UK personal allowance
Lost in claim years
Retained
Bringing funds into the UK
Unlimited, tax-free
Depends on the source
For the underlying rules on foreign income, HMRC's tax on foreign income pages set out the arising-basis default that now applies to everyone who cannot, or chooses not to, claim FIG.
Case study: a US executive relocating to London
Take "Daniel", a US citizen moving to London in autumn, who has been mn, a non-UK resident for the previous 15 years. He holds a US brokerage account with a £500,000 unrealized gain and £200,000 of foreign investment income due next year.
Before his residence start date, Daniel sells the brokerage holdings, realizing the £500,000 gain. There is no UK CGT because he is still non-resident; he pays US tax at long-term capital gains rates and rebases the portfolio. On arrival, he claims the 4-year FIG regime, so his £200,000 of foreign income is UK-tax-free and can be remitted to buy a London home with no UK charge. He keeps his investments in US-domiciled funds, avoiding any PFIC exposure, and uses Form 1116 to credit UK tax on his UK salary against his US bill. Had he waited three months to sell, the £500,000 gain would have risked UK CGT and a credit-timing mismatch — a materially worse outcome from three months' delay.
Ready to plan your move to the UK the right way?
Pre-arrival windows are short, and they do not reopen. If you are relocating to the UK in the next 12 months, TaxYork's dual-qualified US-UK advisers will map your residence date, model the FIG claim, and sequence your disposals before the door closes. Start with our US-UK relocation tax checklist. Speak to us at hello@taxyork.com or 020 3488 8606, or visit taxyork.com to book a cross-border planning review.