Two tax nets, one coordinated bill
The two systems reach you on different principles. The United States taxes on status: citizens and green card holders file a federal return on worldwide income no matter where they live, so twenty years in London does not end the annual Form 1040. The UK taxes on residence: as a UK resident in 2026/27 you are taxed on worldwide income, with the personal allowance at £12,570 and rates running from 20% to 45%. A Brit moving the other way has no citizenship-based US tax, so their position is residence-driven, but the transition year can still catch them in both systems at once. Either way, being in both nets is the starting point, not the problem itself, because the US-UK tax treaty and credit rules exist precisely to reconcile the overlap.
How the relief actually works
The treaty decides which country has the primary right to tax each type of income, and foreign tax credits make the other country give relief for the tax already suffered. For an American in the UK the usual pattern is that the UK taxes first as the country of residence, and the US then allows a foreign tax credit on Form 1116 for the UK tax paid, often reducing the US bill to nil where UK rates are higher. The Foreign Earned Income Exclusion on Form 2555 (up to $132,900 of earned income for the 2026 tax year) is an alternative for employment income, but you cannot apply both the exclusion and a credit to the same dollar. Crucially, the credit ordering is decided income stream by income stream, not in one sweep, and getting it right is the single biggest driver of whether a cross-border household pays a fair amount or overpays.
Where people really do pay twice
The practical risk is not classic double taxation so much as gaps between the systems. A capital gain realised in March 2027 sits in the UK 2026/27 year but the US 2027 calendar year, which can leave a credit stranded and unusable when it is needed. Claiming the UK's FIG regime without checking the US side can give up UK tax that would have generated a US credit, leaving the income taxed in the US with no relief. And ISAs and many UK funds are tax-free in the UK but taxable, and often penalised, by the US, a trap covered in our guide to PFIC and ISA problems for Americans. Finalising one country's return before the other is how credits stop matching, which is why our arrival-year guide treats the two filings as one exercise. Horizon handles the UK side on fixed fees agreed upfront, with expat and non-resident returns from £550, and a free clarity call at /book is the quickest way to scope your position.