US Citizens and Green Card holders in the UK

US citizens are taxed on their worldwide income on their US tax returns regardless as to where they live in the world.

For those residing in the UK, they may also need to file annual UK tax returns where income is often reported on both sets of returns.

In order to try and prevent double taxation, the US/UK tax treaty (which is made up of a series of articles) can be utilised although care is needed to ensure that this is properly applied. 

Prepayment of UK taxes is often needed in order for foreign tax credits to be available on the corresponding US tax returns. Else, double taxation may occur.

Where a US citizen has an interest in a foreign company, trust or partnership, there can be additional US tax consequences with additional filing requirements.

Green card holders

An individual issued with a Green Card is considered a lawful permanent resident of the US even if that person is living abroad. Green Card holders are treated as US resident for US income tax purposes subject to US tax on worldwide income. In most cases, a US tax return must be filed annually.

Careful planning and awareness of these issues can help to minimise US tax consequences.

If you would like to speak to us about any of the issues raised above please contact us.