US and UK Dual Tax Return Preparation: What Every American Expat in Britain Must File Each Year

Thousands of American citizens living in the United Kingdom face a unique challenge that most other expats never encounter. The United States requires all citizens and green card holders to file an annual US tax return, no matter where they live in the world. At the same time, they must also meet UK tax obligations if they are tax resident in Britain.

This creates a dual filing requirement that can be complex, time-sensitive and risk heavy. Incorrect filings can lead to penalties, double taxation or compliance issues. Working with a specialist US–UK tax firm such as Xerxes Associates LLP ensures that American expats remain fully compliant while minimising their tax exposure.

Why American Expats Must File Both US and UK Tax Returns

Unlike most countries, the US tax system is based on citizenship, not residency. This means:

If you are a US citizen, you must file US taxes regardless of where you live
If you are a UK resident, you must also file UK taxes on your UK-source income and potentially your worldwide income

If not managed correctly, this dual obligation leads to unnecessary tax burdens, incorrect filings or missed tax relief opportunities.

Key US Tax Forms Required for Americans Living in the UK

American expats must typically file several core IRS forms every year. The most common include:

Form 1040 – US Individual Income Tax Return

This is the main US tax return required of all American citizens.

Form 2555 – Foreign Earned Income Exclusion (FEIE)

Allows eligible expats to exclude a portion of foreign-earned income.

Form 1116 – Foreign Tax Credit (FTC)

Provides tax credits for UK taxes paid, helping avoid double taxation.

FinCEN Form 114 – FBAR

Required if the total value of foreign accounts exceeds USD 10,000 at any point during the year.

Form 8938 – FATCA

Applies to higher-value foreign assets depending on thresholds.

Not all expats need every form, but identifying the correct combination is essential for compliance.

Understanding UK Tax Obligations for American Expats

If you are tax resident in the UK, you may need to file a HMRC Self Assessment tax return, including:

UK employment income
Self-employment or contractor income
Rental income from UK or overseas property
Dividends and investment returns
Overseas income if you are taxed on the arising basis

Your UK filing determines the level of foreign tax credits you can apply against your US tax return, making accurate coordination between both systems crucial.

The Importance of the US–UK Tax Treaty

The US–UK Tax Treaty prevents many forms of double taxation. When applied correctly, it ensures income is only taxed once between the two jurisdictions. However, treaty application requires careful analysis because:

Some income is taxed exclusively by one country
Some income is taxable in both but with credits applied
Certain pensions, investments and social security benefits require specialist handling

Xerxes Associates LLP guides clients through the treaty to secure tax relief and avoid unnecessary liabilities.

Coordinating Deadlines for US and UK Filings

US Deadlines

Standard deadline: 15 April
Automatic extension for expats: 15 June
Further extension available to 15 October

UK Deadline

Online Self Assessment: 31 January following the tax year

Synchronising both deadlines is important to ensure proper foreign tax credit claims.

Why Specialist US–UK Tax Preparation Matters

Dual filing is not simply filing two tax returns. It requires integrated tax planning that aligns both systems so that each return supports the other. Mistakes often happen when expats work with accountants who only understand one side of the process.

Xerxes Associates LLP specialises exclusively in US–UK tax affairs and assists clients with:

Correct form selection and preparation
Treaty-based tax relief
Minimising IRS liabilities
Ensuring HMRC compliance
Correct application of FEIE and FTC
Avoiding penalties from FATCA or FBAR breaches

This prevents costly errors and substantially reduces the risk of double taxation.

US citizens living in the UK can navigate dual tax obligations confidently when supported by experienced cross-border tax professionals. With the right guidance, expats can meet every requirement, maximise available reliefs and ensure complete tax compliance year after year.