US-UK Tax

Do US citizens in the UK pay tax twice?

Answered by Jordan Onraet-Wells, Founder & Chartered Tax Adviser (CTA). Published 17 July 2026. Last reviewed 17 July 2026.

The short answer

No, usually not, although they must file tax returns in both countries. The US taxes its citizens on worldwide income wherever they live, and the UK generally taxes its residents on worldwide income too, so a US citizen in the UK normally files both a US Form 1040 and a UK Self Assessment return each year. The US-UK treaty and foreign tax credits then stop the same income being taxed in full twice, so in practice you pay roughly the higher of the two countries' rates rather than both.

Two returns are usually needed each year: a US Form 1040 (the US taxes citizens wherever they live) and UK Self Assessment once you are UK resident.
The US-UK double taxation convention, in force since 31 March 2003, allocates taxing rights between the two countries.
The UK taxes employment income first through PAYE; the US then credits that UK tax on Form 1116, which often reduces the US tax on the same salary to nil.
The treaty saving clause lets the US tax its own citizens largely as if the treaty did not exist, so UK tax-free products such as ISAs are still taxable on the US return.
The UK 4-year FIG regime (from 6 April 2025) can remove UK tax on new arrivals' foreign income, but it relieves UK tax only; the US tax still stands.

How the double tax relief works

The country taxing second gives credit for tax already paid to the country that taxed first. For employment income the UK normally taxes first through PAYE, and the US then allows a foreign tax credit (Form 1116) for that UK tax on the Form 1040. Because UK income tax rates are generally higher than US federal rates, the UK tax often covers the whole US liability on the same salary. The full mechanics, with a worked example, are in our guide to Americans living in the UK.

The common trap: the treaty saving clause

The saving clause in Article 1(4) of the US-UK treaty lets the US tax its own citizens largely as if the treaty did not exist. So something tax-free in the UK is not automatically free of US tax: ISAs, Premium Bond prizes and the UK 25% pension lump sum can all still be taxable on the US return, and non-US funds such as OEICs and ETFs are punitively taxed as PFICs. And if the FIG regime removes UK tax on foreign income, there is no UK tax to credit, so the US tax on it stands in full.

What to do

File both returns and make sure the two sides share figures so the credits line up across the mismatched tax years (the UK year runs 6 April to 5 April, the US year is the calendar year). Horizon prepares the UK Self Assessment (SA100 with SA109 residence pages where relevant) and supplies the figures needed for the credit claim; the US Form 1040, FBAR and FATCA filings are handled by our US partners (Enrolled Agents and CPAs), whom we coordinate for you. Take joined-up advice before opening an ISA, buying non-US funds or drawing a pension lump sum.

Go deeper

Sources and further reading

This is general information for the 2026/27 UK tax year, not personal tax advice; speak to a Chartered Tax Adviser about your own position.

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