US Taxes as an American Expat in the UK in 2025

Living as a U.S. expat in the UK brings exciting opportunities but also unique financial challenges, especially when it comes to taxes. As of 2025, compliance with U.S. tax obligations remains critical for expatriates, and understanding key concepts such as dual taxation, reporting requirements, and available exclusions can save you time, stress, and money. Here’s an updated and SEO-friendly guide tailored for expats navigating these complexities:

Why U.S. Citizens in the UK Must File Taxes

Even while residing abroad, U.S. citizens and green card holders are obligated to file annual tax returns with the IRS, reporting worldwide income. This includes earnings from UK employment, investments, or business activities. Additionally, expats may need to report their foreign financial accounts via the Foreign Bank Account Report (FBAR) if the total value exceeds $10,000 at any time during the year.

Understanding Dual Taxation

Although you may pay income tax in the UK, the U.S. has mechanisms to prevent double taxation:

• Foreign Earned Income Exclusion (FEIE): This allows qualifying individuals to exclude up to a set amount of foreign earnings ($120,000 in 2025, adjusted annually for inflation).
• Foreign Tax Credit (FTC): Credits for taxes paid to the UK can reduce your U.S. tax liability. Navigating these options can be complex, but using them effectively ensures you’re not overtaxed.

Deadlines and Extensions

For U.S. expats, the regular tax filing deadline is April 15, but an automatic extension to June 15 applies for those residing abroad. Additional extensions may be requested until October 15, giving expats more flexibility to gather required documents.

Navigating Key Tax Forms

• Form 1040: Required for all U.S. taxpayers, this is the cornerstone of your tax filing.
• Form 8938: For reporting specified foreign financial assets.
• Form 2555: Used for the FEIE.
• Form 1116: To claim the Foreign Tax Credit.

Why Seek Professional Help

The interplay between U.S. and UK tax laws—such as the differences in property tax regimes and treatment of pensions—can be overwhelming. Professional tax advisors, like those at Xerxes Associates LLP, offer tailored services to ensure compliance while minimising your liabilities. They can also assist with expatriation services, ITIN applications, and streamlined filing for those who are behind on their taxes​.

Key Takeaway

For American expats in the UK, understanding and managing U.S. tax obligations is essential. Leveraging professional advice ensures you remain compliant while optimising your financial outcomes. To explore tailored tax solutions, visit Xerxes Associates LLP or consult their expat tax specialists.

For further assistance, you can contact Xerxes Associates LLP here.