Editor, Author at Xerxes Associates LLP

What the 2025 US Election Could Mean for Expat Tax Rules in the UK

Every US election brings policy shifts that ripple far beyond American borders, and 2025 is shaping up to be no exception. For US citizens living abroad, particularly those based in the United Kingdom, changes in tax law are among the most closely watched outcomes. With both major parties discussing new approaches to global taxation, foreign income reporting, and IRS enforcement, expatriates are right to ask how the results might affect them.

At Xerxes Associates LLP, our team of dual-qualified advisers monitors these developments closely to help clients anticipate and adapt. While election campaigns often focus on domestic policies, expat taxation has quietly become a topic of growing interest in Washington. With more than nine million Americans living outside the United States, both the Treasury and Congress are increasingly aware of the financial and compliance implications of overseas citizenship.

One of the most significant areas under discussion is the citizenship-based taxation model, which requires all US citizens, regardless of residence, to report and pay tax on worldwide income. Some policymakers are exploring the idea of transitioning to a residency-based system, similar to the one used in nearly every other developed country. If introduced, this shift could free many US expats from the complex dual-reporting obligations that currently apply under the Foreign Account Tax Compliance Act (FATCA) and the Bank Secrecy Act (FBAR) requirements.

While such a change would represent a major simplification, it is important to remain realistic. A move away from citizenship-based taxation would require substantial legislative reform and international coordination, which means any transition would likely take years. In the meantime, expatriates in the UK remain bound by existing IRS rules, including annual reporting of income, capital gains, and foreign financial accounts.

Another area drawing attention is the Foreign Earned Income Exclusion (FEIE), which currently allows US expats to exclude a portion of their overseas earnings from federal taxation. Depending on the outcome of the 2025 election, adjustments to this threshold or its qualification criteria could impact how much relief US citizens abroad can claim. Similarly, the Foreign Tax Credit (FTC), which prevents double taxation by offsetting UK taxes paid against US liabilities, could see modifications that change the balance between the two systems.

Tax enforcement is also likely to evolve. In recent years, the IRS has expanded its use of data analytics and cross-border information sharing with HMRC. Under the FATCA framework, financial institutions in the UK are required to disclose details of US account holders, allowing the IRS to identify non-compliance more effectively. Regardless of who wins the election, this trend toward increased transparency is expected to continue. The political conversation may influence how aggressively the IRS prioritises overseas audits and how it allocates funding to global tax compliance programs.

For American entrepreneurs and high-net-worth individuals living in the UK, potential changes to corporate and estate tax are also worth watching. Adjustments to controlled foreign corporation (CFC) rules or inheritance exemptions could affect those holding investments or family trusts abroad. Early planning and structural review can help mitigate exposure before new laws take effect.

In every election cycle, speculation creates uncertainty. The best response for expatriates is to focus on preparedness rather than prediction. Ensuring accurate record-keeping, maintaining compliant filings, and staying informed through a professional adviser will always provide protection, no matter which policies emerge.

At Xerxes Associates LLP, we continuously monitor US and UK legislative changes to help clients understand how shifting political landscapes affect their tax obligations. Our advisers provide proactive strategies for both short-term planning and long-term wealth protection, ensuring that compliance remains seamless even as laws evolve.

To discuss how potential changes in US tax policy could affect your personal or business situation, visit www.xerxesassociatesllp.com and book a consultation with one of our dual-qualified US-UK tax specialists.

If you are a US expat living in London or elsewhere in the UK, get in touch with us to take advantage of the comprehensive, expert tax advice service that Xerxes Associates LLP provides to all our clients.

How US Expats in the UK Can Legally Minimise Capital Gains Tax on Property Sales

Owning property in the United Kingdom has long been a popular choice for American expatriates, both as a home and as an investment. However, selling that property can create complex tax consequences on both sides of the Atlantic. With the right planning, many of these liabilities can be reduced or even avoided altogether. At Xerxes Associates LLP , our dual-qualified team helps US citizens in the UK navigate the intersection between HMRC and IRS rules to ensure property transactions are handled efficiently and compliantly.

For Americans living in Britain, the first step is understanding that both the UK and the US tax capital gains worldwide . This means that when you sell a property in the UK, both HMRC and the IRS may expect a portion of your profit. The UK applies Capital Gains Tax (CGT) based on your period of ownership, while the US taxes the same gain under its global taxation system. Without careful coordination, this can lead to double taxation.

Fortunately, the US-UK Double Taxation Treaty provides relief. When properly applied, it allows taxpayers to offset taxes paid in one country against liabilities in the other, effectively preventing the same income from being taxed twice. The key is timing and documentation. Filing accurate records, establishing the correct basis value, and applying the relevant treaty articles can significantly reduce the overall burden.

In the UK, private residence relief can exempt part or all of the gain if the property was your main home for the majority of ownership. US citizens should note, however, that the IRS does not always recognise the full scope of this relief. The US exclusion on the sale of a primary residence is capped at 250,000 USD for single filers and 500,000 USD for married couples, and additional currency adjustments may apply. As exchange rates fluctuate, Xerxes Associates LLP assists clients in converting values correctly and ensuring both tax returns reflect the same underlying transaction.

For investment or buy-to-let properties, additional strategies can help. Accurate tracking of improvement costs, allowable deductions, and purchase expenses can lower your taxable gain in both jurisdictions. Timing also matters. Selling a property in a tax year when your income is lower may place you in a reduced CGT bracket, saving thousands in potential tax.
Residency status adds another layer of complexity. If you are non-domiciled in the UK and claim the remittance basis, only gains brought into the country may be subject to UK tax. However, the US will still tax the worldwide gain. Aligning these positions through professional advice ensures that you remain compliant without overpaying.

Common mistakes include failing to report the sale to the IRS because the property was located abroad or assuming HMRC’s reliefs automatically apply in the US. With global data-sharing agreements expanding, both authorities now receive cross-border transaction information directly from financial institutions. Late or inconsistent reporting can trigger penalties, so expert coordination is essential.

At Xerxes Associates LLP , our advisers prepare both HMRC and IRS filings side by side, ensuring that exchange rates, treaty claims, and reliefs are applied consistently. This dual-jurisdiction approach helps clients avoid unnecessary duplication while maintaining complete compliance. We also provide proactive planning for those considering a future sale, including advice on ownership structure, timing, and reinvestment strategies that align with both tax regimes.

Capital gains planning is not about avoidance, but optimisation. With the right advice, US expats can meet every legal requirement while retaining more of their profit. Whether you are preparing to sell your UK home or reviewing a property portfolio, professional cross-border guidance is the key to protecting your wealth.

To arrange a confidential consultation with a dual-qualified adviser, visit www.xerxesassociatesllp.com and discover how Xerxes Associates LLP helps US expats in the UK achieve tax efficiency and peace of mind.
If you are a US expat living in London or elsewhere in the UK, get in touch with us to take advantage of the comprehensive, expert tax advice service that Xerxes Associates LLP provides to all our clients.

UK Residency Rules for Americans: How Visa Status Impacts Your Tax Obligations

For many Americans living and working in the United Kingdom, understanding how UK residency rules affect taxation is one of the most important — yet most misunderstood — aspects of financial planning. Whether you’ve relocated for work, study, or family reasons, your visa type and duration of stay can significantly influence how both HMRC and the IRS treat your income and assets. At Xerxes Associates LLP, the focus is on helping US expats interpret these rules correctly to stay compliant while minimising unnecessary tax exposure.

The UK operates under a Statutory Residence Test (SRT) — a framework introduced by HMRC to determine whether an individual is considered a UK tax resident for a given tax year. The SRT takes into account several key factors, including the number of days spent in the UK, the strength of your ties (such as family, accommodation, or employment), and your previous residency history. Understanding how these elements interact is essential because once you qualify as a UK tax resident, you are generally liable for tax on your worldwide income and gains.

However, most US citizens in the UK remain subject to dual tax exposure, as the United States taxes its citizens on a worldwide basis regardless of where they live. This means that even if your income is fully taxed in the UK, you may still have reporting obligations to the IRS, including the need to file annual tax returns, FBAR (Foreign Bank Account Report) disclosures, and possibly FATCA-related documentation. Fortunately, the US-UK Double Taxation Treaty exists to prevent the same income from being taxed twice, provided the filings are managed correctly and consistently.

Your visa category plays a direct role in determining how residency is applied. For example, short-term visa holders — such as students, seasonal workers, or visiting specialists — may spend part of the year in the UK without triggering full residency, depending on the number of days present and ties maintained. Conversely, those on skilled worker or family visas often meet the SRT threshold quickly, making them liable for full UK tax obligations from their first year. In such cases, understanding the split-year treatment provisions is critical, as they allow part of the year to be taxed as non-resident and part as resident, avoiding unnecessary tax overlap.

Another important concept for Americans in the UK is the domicile distinction. While residency determines where you pay tax, domicile determines how your foreign income and gains are treated. Non-domiciled individuals may be eligible to claim the remittance basis, which means they are only taxed in the UK on income brought into the country. However, this claim must be made carefully, as it may affect eligibility for certain allowances and could lead to a remittance basis charge after several years of UK residence.

For high-net-worth individuals and business owners, visa planning and tax residency should be considered long before relocating. Xerxes Associates LLP regularly assists clients in structuring their affairs efficiently — from managing US and UK payroll reporting to ensuring treaty reliefs are claimed properly. The firm’s dual-qualified team can also advise on how residency changes impact pension contributions, capital gains, property ownership, and investment income on both sides of the Atlantic.

Given that both HMRC and the IRS are expanding their information-sharing networks under FATCA and the Common Reporting Standard (CRS), maintaining accurate and transparent reporting has never been more important. Failure to align US and UK filings can lead to double taxation, loss of treaty benefits, or penalties for non-disclosure.

If you’re an American professional, entrepreneur, or retiree navigating life in the UK, expert cross-border guidance is essential. The rules surrounding tax residency, visa status, and domicile can be intricate, but with the right advice, they can also be managed strategically to your advantage.

To speak with a dual-qualified tax adviser about your specific circumstances, visit www.xerxesassociatesllp.com and arrange a confidential consultation with the expatriate tax team.

Cryptocurrency Taxation for US Expats in the UK: Latest HMRC & IRS Updates

As cryptocurrency continues to evolve from a niche investment to a mainstream financial asset, regulatory bodies across the world are tightening their grip on how it is reported and taxed. For US citizens living in the UK, understanding the rules around crypto taxation is particularly important, as they are subject to both HMRC and IRS reporting obligations. With tax authorities sharing more data than ever before, non-compliance is no longer an option. The team at Xerxes Associates LLP specialises in helping American expatriates navigate this complex cross-border tax environment, ensuring their crypto portfolios remain compliant on both sides of the Atlantic.

Cryptocurrency is treated differently in the US and UK, but both tax systems agree on one thing — it is not “currency” in the traditional sense. The HMRC classifies digital assets as property, meaning capital gains tax applies whenever you sell, trade, or otherwise dispose of your crypto. This includes converting tokens into fiat, swapping one coin for another, or even using cryptocurrency to pay for goods and services. Each of these events can trigger a taxable gain or loss based on the market value at the time of the transaction.

For US taxpayers, the situation is even more complex. Under IRS rules, American citizens must report their worldwide income and capital gains regardless of where they live. This means that crypto gains realised while residing in the UK must be reported both to HMRC and the IRS. The United States has a unique taxation model based on citizenship rather than residency, which can lead to dual reporting requirements for expats. However, relief mechanisms such as the Foreign Earned Income Exclusion (FEIE), Foreign Tax Credit (FTC), and the US-UK Double Taxation Treaty can help to offset or eliminate double taxation when managed correctly.

Recent updates from both tax authorities highlight the growing seriousness with which crypto is being treated. The IRS has included a dedicated question about digital assets on Form 1040, and exchanges are now required to issue information reports under expanded 1099-K regulations. Meanwhile, the UK has introduced enhanced compliance measures under the Cryptoasset Reporting Framework (CARF), aligning with the OECD’s global standards for tax transparency. Beginning in 2026, UK-based exchanges will be required to share user data automatically with tax authorities worldwide, including the United States.

Given these developments, it is crucial for US expats in the UK to maintain accurate records of all crypto transactions. This includes the date of purchase, sale value, exchange fees, and wallet addresses. HMRC expects clear documentation, and the IRS has made it clear that failure to disclose crypto activity could be treated as wilful tax evasion.

Xerxes Associates LLP advises clients to take a proactive approach by conducting an annual crypto tax review. By consolidating data across wallets and exchanges, calculating cost basis accurately, and applying available treaty reliefs, expats can stay compliant while minimising unnecessary tax liabilities. The firm’s dual-qualified tax professionals are experienced in preparing both US and UK returns, ensuring that every filing reflects consistent and defensible information.

In 2025, both HMRC and the IRS are investing in blockchain analytics tools to identify unreported assets. This marks a new phase of cross-border cooperation and enforcement. For Americans living in London or elsewhere in the UK, this means transparency is not optional — it is a legal necessity. Working with a firm that understands both systems is no longer just a convenience, but a compliance safeguard.

To learn more about how Xerxes Associates LLP assists US citizens in the UK with cryptocurrency taxation, visit www.xerxesassociatesllp.com and schedule a consultation with one of their cross-border tax specialists.

Understanding the Tax Implications of US Retirement Accounts for Expats in the UK

Moving from the United States to the United Kingdom can be exciting, but for many American expats, the financial transition is complicated. One of the most common concerns is how US-based retirement accounts – such as 401(k)s, IRAs, and Roth IRAs – are treated once you become a UK resident. Failure to understand the rules can lead to unexpected tax bills, double taxation, or even penalties from the IRS or HMRC.

The first challenge for US expats in the UK is the concept of dual taxation. Both the United States and the United Kingdom tax their residents on worldwide income. This means that distributions fraom a 401(k) or IRA could, in theory, be taxed twice – once by the IRS and again by HMRC. Fortunately, the US–UK Tax Treaty helps mitigate this issue. The treaty generally ensures that distributions are only taxed in one jurisdiction, but the rules can be complex and depend on your specific situation.

Another consideration is the timing of withdrawals. In the US, early withdrawals from retirement accounts typically attract a penalty in addition to ordinary income tax. For expats living in the UK, the situation can become even more complex. HMRC does not always recognise the same penalty rules, and withdrawals may be taxed differently in the UK depending on the type of account. For example, Roth IRAs, which are tax-free in the US under certain conditions, may not always enjoy the same treatment in the UK.

Contributions are another area where expats face challenges. Once you move to the UK, continuing to contribute to US retirement accounts may not always be straightforward. US citizens must consider IRS rules about contributions while living abroad, and the UK tax system may not provide the same relief for contributions that would apply if you were still resident in the United States. In some cases, it may be more tax-efficient to explore UK pension options while maintaining existing US accounts without new contributions.

Currency fluctuations also play an important role. Because retirement accounts are denominated in US dollars, the value of withdrawals can vary significantly when converted into pounds. This introduces an extra layer of financial planning for US expats who must balance their retirement needs with the unpredictability of foreign exchange markets.

For many expats, professional advice is essential. The overlap between IRS rules, HMRC requirements, and the tax treaty means that attempting to navigate retirement account taxation alone can be risky. The penalties for mistakes are steep, ranging from unexpected tax bills to fines for non-compliance with FBAR or FATCA reporting obligations. Xerxes Associates LLP specialises in helping US expats in the UK make sense of these rules, avoid double taxation, and optimise their retirement income strategy.

In short, US expats in the UK cannot afford to take a “wait and see” approach when it comes to their retirement accounts. The interplay between two tax systems makes careful planning a necessity. With the right advice, however, it is possible to enjoy the benefits of retirement savings without being caught out by international tax complications.

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Top 5 Common Mistakes US Expats Make When Filing UK Taxes

Every year, thousands of US expats living in the UK face the daunting task of filing taxes in two countries. While the US is one of the few countries that taxes its citizens on worldwide income regardless of where they live, the UK also requires residents to report their income. This dual system creates a complicated environment for expats, and it is easy to make mistakes that lead to penalties, double taxation, or lost opportunities for tax efficiency.

One of the most common mistakes is misunderstanding residency rules. Simply living in the UK does not always mean you are automatically treated as a UK tax resident. The Statutory Residence Test determines residency status and considers factors such as time spent in the UK, ties to the country, and employment circumstances. Misinterpreting your residency can result in either underreporting or overreporting income, both of which carry risks.

Another frequent error is failing to take full advantage of the US–UK Tax Treaty. This treaty exists to prevent double taxation, but it is not automatic. Expats must file the correct forms to claim treaty benefits. Missing this step can mean paying more tax than necessary, as both the IRS and HMRC may claim the right to tax the same income.

A third issue is inadequate reporting of foreign bank accounts and assets. US citizens are subject to strict FBAR and FATCA reporting requirements, which apply even if the accounts are in the UK and used for day-to-day living. Many expats mistakenly believe these rules only apply to offshore tax havens, but in reality, they apply to all foreign accounts above certain thresholds. Non-compliance carries heavy penalties.

Another mistake is poor handling of pensions. UK pensions are treated differently under IRS rules compared to UK rules. For example, contributions to a UK pension scheme may be tax-advantaged in the UK but could still be taxable in the US unless correctly structured under treaty provisions. Mismanagement of pensions often leads to double taxation or missed reliefs.

Finally, many expats simply assume they can handle their tax filings without professional help. The combination of IRS regulations, HMRC rules, treaty provisions, and reporting requirements is complex. Even minor oversights can result in major financial consequences. Professional firms such as Xerxes Associates LLP provide tailored advice that ensures compliance while identifying opportunities for tax efficiency.

The reality is that living as a US expat in the UK comes with a unique set of tax responsibilities. By avoiding these common mistakes and seeking professional guidance, expats can ensure compliance, reduce their tax burden, and avoid unnecessary stress. Taxes do not need to be an obstacle to enjoying life abroad, but they do require careful attention.

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What the 2025 US Election Could Mean for Expat Tax Rules in the UK

How US Expats in the UK Can Legally Minimise Capital Gains Tax on Property Sales

UK Residency Rules for Americans: How Visa Status Impacts Your Tax Obligations

Cryptocurrency Taxation for US Expats in the UK: Latest HMRC & IRS Updates

Understanding the Tax Implications of US Retirement Accounts for Expats in the UK

Top 5 Common Mistakes US Expats Make When Filing UK Taxes

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