We help U.S.-connected clients living in the U.K. assess their current financial situation, understand their long-term goals and objectives, and build a robust and flexible investment plan for the future – all while considering the intricacies (and importantly, the interaction) of the U.S. and U.K. tax systems.

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This is the first post in a new series where we will outline the top pitfalls we see U.S.-connected individuals living in the U.K. fall into time and time again.

Topics we plan to cover in this series are:

  • Tax Compliance
  • Problematic assets
  • Trusts
  • Roles and responsibilities
  • Transatlantic marriages
  • U.S./U.K. philanthropy
  • Leaving the U.S. tax net

In this post, we tackle tax compliance. Here we will discuss the traps you should seek to avoid when filing your U.S. and U.K. tax returns.

Tax Compliance

If you’re reading this you are probably already aware, but for the avoidance of doubt:

If you are a U.S. citizen (or have a green card) you need to file a U.S. tax return every year regardless of where you live in the world.

Even if you don’t currently have a physical U.S. passport (or it is expired), if you are a citizen, you are required to file.

Accidental Americans

This includes accidental Americans: those who are born with U.S. citizenship but may have never lived in the U.S. or only lived there when they were very young.

If you fall into this camp and were not aware that you had a U.S. tax filing requirement, fear not. The IRS has a program for non-wilful delinquent filers called the Streamlined Foreign Offshore Procedures, which allows you to get into compliance by correctly filing (and paying any tax owed) the last three years of U.S. tax returns and the last six years of FBARs (Foreign Bank Account Reporting). There are a handful of very good accountants who specialise in helping people who are subject to tax in both the U.S. and U.K. who can help you determine whether you qualify for the streamlined program and complete all necessary filings on your behalf.

As an aside, if you would like to explore expatriation and have (non-wilfully) never filed a U.S. tax return, then you could also be eligible for the streamlined program to get into compliance with the IRS before formally expatriating. If you’re interested in learning more about expatriation, here is a link to a webinar we gave on the topic.

Monitoring the basis on which you are taxed in the U.K.

When asking most Americans how long they have been in the U.K. and what brought them over, we often get some version of the following:

"We came over for work with the intention of staying a few years. Next thing we know, we bought a house, have two kids in the British school system, and love living in London. It’s been 16 years and we don’t see ourselves moving back any time soon."

The common thread between most of the stories we hear is that they thought it would be a short-term move. One of the biggest issues is that people plan based on this assumption. The problem is that once it is clear you are likely to remain for longer, it might be too late. You may have (unknowingly) created a situation where you have significant assets or income offshore to the U.K. which you cannot bring into the country without suffering additional U.K. tax (potentially double tax) and unnecessary tax compliance fees.

Some background here may help. When you come to the U.K. as a non-domiciled individual, you have the option of filing your taxes in one of two ways: the arising basis or the remittance basis.

It is quite common to see accountants default to filing on the remittance basis without fully understanding your wider asset picture or long-term plans to remain in the U.K.

In many cases, it might make more sense to file on the arising basis from the beginning – and pay a little more tax – to retain flexibility in your financial life.

If you’re interested in learning more, I wrote a more detailed post on the differences between the U.S. and U.K. tax systems which you can read here.

We would encourage you to ask your accountant whether the remittance basis or arising basis is appropriate to file given any additional clarity you have on the future.


Filing taxes is often complex, even more so when you have to do it in multiple countries. However, understanding some of the common pitfalls around tax compliance can help you avoid the traps that many U.S.-connected people fall into time and time again.

Whether you plan to spend a few years, a few decades, or the rest of your life outside the U.S., Brown Advisory can deliver a comprehensive cross-border investment plan for you and your family that can move with you wherever life may take you. Learn more >

Billy Mathews, a U.S. expat himself, is a Portfolio Manager in our London office and helps U.S.-connected clients build U.S./U.K. tax efficient investment portfolios to meet their long-term goals and objectives.

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This material is not intended to be, and shall not be construed as being, investment advice. Investment decisions should not be made on the basis of it. Past performance is not indicative of future performance and there is a risk that some or all of the capital invested may be lost. The information contained herein is based on materials and sources that we believe to be reliable. We make no representation, either express or implied, in relation to the accuracy, completeness or reliability of that information. The views expressed are those of the author and Brown Advisory as of the date referenced and are subject to change at any time based on market or other conditions. Brown Advisory does not provide tax advice.