Who the exit tax actually reaches
The expatriation tax under section 877A exists because the US taxes its citizens and residents on worldwide income and wants to tax built-up gains before someone leaves that net for good. It is not triggered by moving abroad. It is triggered by a formal act of expatriation: renouncing US citizenship, or abandoning a green card if you are a long-term resident. Those are the only two doors in. An H-1B holder who packs up and moves to London has done neither, so there is no Form 8854, no covered-expatriate test and no deemed sale. Our guide to the US exit tax on giving up a green card or citizenship covers the people it does reach, and the UK-US tax guide covers the wider picture.
The 8-of-15 test and why H-1B years do not count
Giving up a green card only counts as expatriation if you are a long-term resident: a lawful permanent resident of the United States in at least 8 of the 15 tax years ending with the year your green-card status ends. The test counts years holding the card, not years living in the country, so time on an H-1B does not add to it. Someone who spends six years on an H-1B, converts to a green card, and hands it back three years later has three green-card years, not nine, and is outside the rule. Two cautions. A part-year on the card counts as a full year, so the clock runs faster than people expect once the card is issued. And even long-term residents only pay if they are covered expatriates, with a $910,000 exclusion for 2026 before any tax is due. The treaty guide explains the green-card treaty tie-breaker trap for those who do hold a card.
What does need planning on a UK move
No exit tax does not mean no tax work. Your 401(k) and IRA are not deemed distributed on the way out; they follow the normal treaty rules once you are UK resident, which our guide to US retirement accounts and UK tax sets out, including the March 2025 change for lump sums. On the UK side, arrival timing matters: the four-year FIG regime that replaced the non-dom rules from 6 April 2025 can relieve UK tax on foreign income and gains for qualifying new arrivals, and lining up the US departure with UK residence is where double taxation on the same income is avoided. Start with our guides to moving to the UK from the USA and UK-US arrival year planning. If a green card is a possibility later, the 8-of-15 clock is worth knowing before you apply.