US Expat Taxes in the UK: A Complete Guide
No matter where you are located, expat taxes must be filed in the US. How are these taxes impacted if you choose to live in the United Kingdom? The UK is a popular choice for an American expat with its many nationalities and English language.
In the US and UK, penalties can be severe for failing to file taxes correctly. It is possible to legally exclude income from tax and reduce your tax liability. So, here you will get the complete guide to US expat taxes in the UK.
You might also like
What Are Expat Taxes Like for US Citizens Living in the UK?
The UK equivalent of the IRS is Her Majesty’s Revenue & Customs office (HMRC). HMRC is the main revenue collection agency for the United Kingdom government. They collect taxes and administer certain regulatory systems, such as the national minimum wage.
The UK tax system is very similar to the US. Tax is levied on income earned, wages, and investment income. PAYE( Pay As You Earn) covers your income tax and national insurance contributions. The tax rates are progressive. This means that the more income you have, the higher the tax rate for each dollar. You can find a tax consultant for U.S. expats in the UK who helps you to achieve the best result about taxes.
U.K. income tax rates for U.S. expats
The U.S. expats living in U.K. cities have established income tax rates that range from 0% to 45 %. Like taxes in the U.S.A., the tax you pay rises as your income increases. Many Americans would pay higher income taxes due to the large range of the U.K.’s highest bands.
2022/2023 U.K. tax rates
| Band | Tax Rates | Taxable income |
| Personal allowance | 0% | £0-£12,570 |
| Basic rate | 20% | £12,571-£50,270 |
| Higher rate | 40% | £50,271 to £150,000 |
| Additional rate | 45% | over £150,000 and up |
The British tax year differs from that of the United States. The U.K. tax calendar begins on April 6th each year and ends on April 5th the following year. If you file by paper, you must file your U.K. tax returns by October 31.
Your U.S. tax documentation follows a calendar-year format, so you might need to combine your pay stubs with your P60s to reflect a complete tax year.
Does a US citizen living in the UK still have to file an IRS tax return?
The short answer is yes. Even expats living thousands of miles from the United States must report their foreign income to the IRS.
This is due to the US citizenship-based tax system that requires US expats worldwide to declare their income. Since 2010, the Foreign Account Tax Compliance Act (FATCA), UK banks have been required to report financial transactions of US expats to the IRS.
Final thought
Expat tax obligations are different and dependent on specific circumstances. Double tax agreements between the UK and USA prevent you from being taxed twice for the same income.
We hope you understand about US expat taxes in the UK.
