The IRS Compliance Checklist for Wealthy Americans Moving to the UK
A compliance checklist for moving to the UK is essential for wealthy Americans because US filing duties continue after relocation and now conflict with the UK's post-6 April 2025 rules on domicile, income, and inheritance tax. This guide sets out the IRS forms, thresholds and UK changes that matter most to high-net-worth movers in 2026.
By the TaxYork Cross-Border Tax Team — reviewed by a US-UK dual-qualified adviser (CPA / Enrolled Agent).
Do wealthy Americans still owe US tax after moving to the UK?
Yes. The United States taxes citizens and green card holders on worldwide income regardless of where they live, so a move to London or Edinburgh does not switch off the IRS. Wealthy movers typically need the Foreign Earned Income Exclusion or the Foreign Tax Credit, plus FBAR and Form 8938 reporting, alongside their new UK obligations.
Citizenship-based taxation is the single biggest reason a proper compliance checklist when moving to the UK matters more for Americans than for almost any other nationality relocating to Britain. Most other countries tax on residence alone, so an American in London faces two parallel filing systems rather than one. Getting the order of elections right in year one avoids double taxation and prevents costly amendments later.
Which US forms open a wealthy mover's filing obligations?
The starting point is usually Form 2555 for the Foreign Earned Income Exclusion or Form 1116 for the Foreign Tax Credit, run alongside FinCEN Form 114 (FBAR) and, where thresholds are met, Form 8938. High earners with UK investment funds or pensions should also file Form 8621 for PFIC holdings and Form 3520 if they receive foreign trust distributions or large gifts.
Choosing between exclusion and credit is not a cosmetic choice. Once the Foreign Earned Income Exclusion is revoked, the taxpayer is locked out for five years under the stacking rule at §911(f), so wealthy movers with UK tax rates above the US rate often do better claiming the Foreign Earned Income Exclusion in early low-income years and the credit once UK tax bites harder.
What changed in the UK on 6 April 2025 that affects this compliance checklist for moving to the UK?
The UK abolished the centuries-old non-dom and remittance basis regime from 6 April 2025, replacing it with a residence-based Foreign Income and Gains regime. Wealthy Americans arriving after a decade abroad can now claim full UK tax relief on foreign income and gains for their first four years of UK residence, which is arguably the single most valuable new planning tool for this group.
Qualifying new residents under the FIG regime need ten consecutive years of non-UK tax residence beforehand, so many corporate transferees and finance professionals moving mid-career will qualify outright. Those who previously used the remittance basis and are now transitioning should also examine the Temporary Repatriation Facility, which lets pre-6 April 2025 foreign income and gains be brought onshore at a flat 12% rate for 2025/26 and 2026/27, rising to 15% the year after, without any requirement to remit the cash during that window physically.
How does the Statutory Residence Test interact with a US person's arrival planning?
The UK's Statutory Residence Test combines day-counting with a ties test covering family, accommodation, work and prior UK presence, and it decides the exact date UK tax residence begins. Getting the arrival date and day count right is foundational to any serious relocation plan, because it determines whether the four-year FIG window opens this tax year or the next.
Up to 60 days can be disregarded for genuinely exceptional circumstances, but this is applied narrowly by HMRC and should never be assumed in planning. Wealthy movers who split a tax year between the US and UK should model both the day count and the accommodation ties well before booking a moving date, since a few days either side of a threshold can shift an entire year's residence status.
Which US reporting thresholds matter most for high-net-worth arrivals?
FBAR applies once the aggregate value of foreign financial accounts exceeds $10,000 at any point in the year. It is filed on FinCEN Form 114 through the BSA E-Filing system by 15 April, with an automatic extension to 15 October. Form 8938 has higher thresholds and duplicates some FBAR information but carries its own separate penalty regime, so any working compliance checklist moving to the UK for wealthy filers with UK current accounts, ISAs, pensions and brokerage holdings should treat both forms as mandatory rather than optional.
The table below sets out the core reporting thresholds a US person living in the UK should check every year.
Form
Threshold (living abroad)
Maximum penalty
FBAR (FinCEN 114)
Aggregate foreign accounts over $10,000 at any time
$16,536 non-wilful per form; $165,353 or 50% wilful
Form 8938
Single >$200,000 / MFJ >$400,000 (year-end)
$10,000, rising to $50,000, plus 40% valuation penalty
Form 3520
Foreign gift or bequest over $100,000
Greater of $10,000 or 5% per month, up to 25%
Why do FBAR penalties matter so much for wealthy movers specifically?
Since the Supreme Court's 2023 decision in Bittner, non-wilful FBAR penalties apply per form rather than per account, and the maximum was set at $16,536 per form effective 17 January 2025 (see the IRS FBAR guidance). A wealthy family with five or six UK accounts across ISAs, current accounts and savings products faces a materially larger exposure than a single-account expat, which is exactly why FBAR belongs near the top of any compliance checklist for clients moving to the UK with higher net worth.
Where prior years were missed entirely, the IRS streamlined filing compliance procedures allow non-wilful taxpayers to catch up with three years of amended returns and six years of FBARs, and the foreign version carries no penalty at all for those who genuinely qualify as non-resident. Our own streamlined filing compliance procedures roadmap covers the full mechanics for dual filers, and a reasonable-cause alternative to streamlined may suit those who do not qualify as non-wilful.
How should wealthy Americans handle UK ISAs and investment funds?
UK ISAs, OEICs, unit trusts and most UK-domiciled funds are treated as Passive Foreign Investment Companies under US tax law, and an ISA wrapper gives no shelter whatsoever from US tax. This is one of the most common and expensive mistakes wealthy movers make, because the UK sells ISAs as fully tax-free while the IRS applies a punitive default PFIC regime under §1291 unless a QEF or mark-to-market election is made on Form 8621. Flagging existing UK investment accounts on day one is exactly the kind of item a proper compliance checklist for moving to the UK is designed to catch before an ISA quietly becomes a PFIC problem.
Are SIPPs treated the same way as ISAs for US tax purposes?
No. SIPPs generally receive treaty-protected pension treatment under the US-UK tax treaty rather than being taxed as PFICs on the underlying wrapper, which makes them a far more US-friendly savings vehicle for a wealthy American living in Britain. Anyone weighing pension contributions against ISA contributions after arrival should treat this distinction as decisive, and specialist advice on drawing on a US pension from the UK is worth taking before large sums move into either wrapper.
Periodic pension income is generally taxable only in the country of residence under Articles 17 and 18 of the treaty. Still, lump-sum withdrawals have their own rules, and the UK's 25% tax-free pension lump sum is not automatically exempt from US tax. This mismatch catches out even sophisticated movers who assume UK tax-free status travels across the Atlantic unchanged.
What is the new UK inheritance tax exposure for wealthy movers?
UK inheritance tax moved from a domicile-based system to a residence-based one from 6 April 2025, meaning long-term UK residents are now exposed to worldwide IHT at 40% above the £325,000 nil-rate band once they have accumulated ten years of UK residence. This is a fundamental shift for wealthy Americans planning a multi-year UK posting, since the old domicile shelter that protected foreign assets indefinitely no longer applies in the same way.
On the US side, the unified estate tax and gift tax exclusion is $13,990,000 for 2025. It rises to a confirmed $15,000,000 per person from 2026 under the One Big Beautiful Bill Act, which made the higher figure permanent rather than a temporary measure due to sunset, as confirmed in the IRS 2026 inflation adjustments release. The annual gift exclusion stays at $19,000 for 2026, while gifts to a non-citizen spouse rise to $194,000, a detail worth flagging for mixed-nationality couples relocating together. Anyone with meaningful UK and US assets should read our note on US estate tax on worldwide assets before the ten-year UK residence clock starts running.
How does the 2026 FEIE figure fit into estate and income planning together?
The Foreign Earned Income Exclusion is confirmed at $132,900 for 2026, up from $130,000 in 2025, under Revenue Procedure 2025-32 — a figure many older guides still get wrong by assuming the 2025 amount simply carries forward unchanged. Wealthy movers coordinating income tax elections with longer-term estate planning should treat this exclusion as one moving part in a much larger picture that includes UK residence-based IHT and the new $15,000,000 US exclusion.
Case study: a wealthy family relocating from California to London
A married couple moved from San Francisco to London in mid-2025 for a four-year corporate assignment, bringing roughly $4.2 million in US brokerage holdings, a $600,000 UK ISA opened by a well-meaning UK relative years earlier, and a family SIPP worth £350,000. Because they had lived outside the UK for the required ten years, they qualified as new residents under the FIG regime and elected full relief on foreign income and gains for their first four UK tax years.
On the US side, they filed Form 1116 for the Foreign Tax Credit rather than the FEIE, since UK higher-rate tax exceeded the US liability on their income. They filed FBAR and Form 8938 covering six UK accounts, made a QEF election on Form 8621 for the inherited ISA to avoid the default PFIC regime, and confirmed their SIPP retained treaty pension protection. Total first-year advisory and filing costs ran to roughly $18,000, a modest figure set against the FBAR and PFIC penalties they avoided by working through a proper compliance checklist and moving to the UK before their first UK filing deadline.
Get your UK relocation tax planning reviewed before you file.
TaxYork's cross-border team builds a personalized plan for every wealthy client relocating to Britain, covering FEIE versus FTC elections, PFIC exposure on UK funds, FBAR and Form 8938 filing, and the interaction between the FIG regime and US estate tax. We coordinate directly with UK advisers so your first year of UK residence is planned rather than corrected after the fact. Contact us at hello@taxyork.com | 020 3488 8606 | taxyork.com.