US Tax CPA for Americans in the UK

Not automatically, and the reason sits on the US side. The relief means little or no UK tax on that foreign income for a few years — but the United States taxes its citizens on worldwide income regardless. The foreign tax credit covers only the tax you actually paid, so a year with no UK tax on that income is a year with no credit to set against the US charge on it.

There is a second effect running the other way: the claim costs you UK allowances, so UK tax on your UK-source income goes up, and that produces more credit. Which effect dominates depends on your mix of income. Your UK accountant makes the claim — we tell you what it costs on the American return before they do.

The US side, and only the US side. We are a US CPA practice: we prepare the 1040 and the international schedules that go with a UK life, run the elections and credit calculations, and handle the account and pension reporting. We do not prepare UK returns and we are not UK tax advisers.

What we do bring is the American consequence of your UK decisions, which is the part that usually goes unexamined. Where you have a UK accountant we coordinate with them so both returns tell the same story. More detail: our US expat tax guide, the US–UK tax treaty explained, our international tax services, and expat support in other countries.

No. An ISA is a UK wrapper, and that shelter does not travel to a US return — the income and gains inside it are reportable in the United States.

It then works against you a second time: because no UK tax was paid on that income, there is no foreign tax credit to offset the American charge. And if the ISA holds UK funds, those raise a separate problem of their own.

A foreign corporation is a passive foreign investment company if 75% or more of its gross income is passive, or at least 50% of its average assets produce passive income. A UK fund will typically meet one of those tests.

Without a qualified electing fund or mark-to-market election, distributions and gains fall into the section 1291 excess distribution rules, which throw the gain back over your holding period and add an interest charge. Each holding is reported separately on Form 8621 — so a portfolio assembled sensibly by a UK adviser can produce a long and expensive US filing.

Broadly, UK inheritance tax now follows residence rather than domicile, and after a long enough stay it reaches worldwide assets. Exactly where you fall is a UK question for a UK adviser.

The American question is ours. US estate tax follows citizenship wherever you live, with a basic exclusion of $15,000,000 for 2026, and there is a US–UK estate and gift tax treaty that governs how the two systems meet. A long-stay American can sit inside both at once, which is worth mapping years before it matters.

Yes, and it catches people out. The unlimited marital deduction that lets one US spouse leave everything to the other does not apply where the recipient spouse is not a US citizen. Lifetime gifts to such a spouse are limited to an annual exclusion of $194,000 for 2026, and transfers at death generally need a qualified domestic trust if the tax is to be deferred. This is worth planning years ahead.

The Streamlined Foreign Offshore Procedures exist for exactly this. They require three years of returns, six years of FBARs, and a certification that the failure was non-willful — due to negligence, inadvertence, mistake, or a good faith misunderstanding of the law — along with physical presence outside the United States for at least 330 full days in one of the relevant years.

Where the requirements are met, the IRS states the taxpayer will not be subject to failure-to-file and failure-to-pay penalties, accuracy-related penalties, information return penalties, or FBAR penalties. Most people who simply did not know are eligible — worth checking before the choice is made for you.