Who Qualifies as a US-UK Dual Filer
Understanding your tax obligations
Bio: Alistair is a chartered accountant with over 20 years of experience dealing in U.S. and U.K. taxation.
Article
March 2025
10 Minute Read
What Does It Mean to Be a US-UK Dual Filer?
A US-UK dual filer is someone who has tax obligations in both the United States and the United Kingdom due to citizenship, residency, or income sources. Unlike most countries that use residency-based taxation, the US taxes its citizens and Green Card holders on their worldwide income, no matter where they live.
The UK, however, taxes individuals based on residency, meaning if you meet the Statutory Residence Test (SRT), you are required to report worldwide income to HMRC. Even if you are not a UK resident, you may still have to file a UK tax return if you earn UK-sourced income (e.g., rental income, employment, or dividends from UK companies).
Why Some Individuals Must File in Both the US and UK
Dual tax filing is required because US and UK tax laws overlap, creating situations where individuals must comply with both systems.
Below are the combinations of tax filing requirements that often lead our clients to become dual filers
Holding a US Citizenship or Green Card, leads their worldwide income to become taxable no matter where they live.
Living in the UK for more than 183 days during the tax year therefore the HMRC considers worldwide income taxable.
Meeting tax residency requirements in both countries, making them dual tax residents.
Earning UK-sourced income as a US citizen, i.e. rental income, dividends from UK company
Earning US-Soured income as a UK citizen, i.e. US dividends, US company wages
It should be noted that the UK has tightened its rules on undeclared foreign income, meaning UK tax residents must fully disclose all overseas earnings, bank accounts, and investments to HMRC.
How the US-UK Tax Treaty Impacts Dual Filers
The US-UK tax treaty helps prevent double taxation and clarifies which country has the right to tax specific income.
Methods for preventing double taxation as provisioned by the dual tax treaty include:
Work-Related Expenses
Employees can claim tax relief on certain work-related expenses that they must pay out of their own pocket, as long as these are necessary for their job and not reimbursed by their employer. Key categories include:
Residency Tie-Breaker Rules
If you qualify as a tax resident in both countries, the treaty provides tie-breaker rules to determine your primary tax residency based on factors such as permanent home, economic ties, and time spent in each country.
Foreign Tax Credits (FTC)
If you pay tax in one country, you can often claim a tax credit in the other country to reduce your tax liability. This prevents you from paying tax twice on the same income.
Pension & Retirement Accounts
The treaty ensures UK pensions and US Social Security benefits are not taxed twice, defining where these payments are taxable. It should be noted US and UK pension treatment is complex under the treaty:
- The US often taxes UK pension contributions and growth, even if they are tax-free in the UK. Withdrawals may also be taxable in both countries, requiring foreign tax credits to avoid double taxation.
- The UK tax rules can lead to unexpected tax liabilities on US retirement accounts (401(k), IRA, etc.), even if no withdrawals are made.
Social Security & National Insurance
The treaty prevents double taxation on Social Security benefits, generally allowing benefits to be taxed only in the country of residence.
Reduced Withholding Taxes
The treaty lowers or eliminates withholding taxes on dividends, interest, and royalties, preventing unnecessary taxation of cross-border investments.
Totalisation Agreement
A separate US-UK Social Security Agreement ensures individuals do not have to pay Social Security/National Insurance contributions in both countries for the same work.
US-UK dual filers may need to file Form 8833 with the IRS to benefit from treaty provisions and ensure proper reporting on their UK Self-Assessment tax return. Given the complexities of pension taxation, it is essential to seek professional guidance to avoid unexpected tax liabilities.
Who Is Required to File Taxes in Both the US and the UK?
US Citizens and Green Card Holders Residing in the UK
The US taxes its citizens and Green Card holders on worldwide income, regardless of where they live. This means that even if you are a full-time UK resident, you must file a US tax return (Form 1040) every year.
Additionally, those with foreign bank accounts exceeding $10,000 at any point in the year must file an FBAR (Foreign Bank Account Report).
UK Residents with US Tax Status
A UK resident with US tax status (such as a US citizen, Green Card holder, or visa holder with financial ties to the US) may have dual tax filing obligations. If you meet the UK Statutory Residence Test (SRT), you are considered a UK tax resident and must report worldwide income to HMRC
Dual Citizens and Their Tax Responsibilities
Holding both US and UK citizenship creates tax obligations in both countries. The US enforces citizenship-based taxation, meaning US citizens living in the UK must file US taxes annually, even if they do not earn US income. At the same time, the UK taxes residents on worldwide income, meaning dual citizens who reside in the UK must also file UK taxes. The US-UK Tax Treaty can help determine which country has the primary right to tax certain types of income, and the Foreign Tax Credit (FTC) may offset taxes paid in one country against the other.
US Expats Employed in the UK
US citizens and Green Card holders working in the UK must comply with both IRS and HMRC tax filing requirements. If you earn employment income from a UK employer, you will likely pay UK income tax under the PAYE system. However, you must still report this income on your US tax return. To reduce tax liability, US expats can claim the Foreign Earned Income Exclusion (FEIE) or the Foreign Tax Credit (FTC).
Additionally, those with UK pension contributions may face double taxation issues, as US tax laws do not always recognize UK pension tax deferrals.
UK Nationals Working or Investing in the US
UK nationals who work in the US, own US-based investments, or receive US rental income may be required to file a US tax return. The IRS taxes US-sourced income even if the individual is a non-resident. Common tax filing triggers include:
Receiving wages from a US employer.
Owning rental property in the US.
Receiving US dividends, interest, or capital gains.
Holding shares in US-based funds (PFIC rules apply).
Non-resident UK citizens may also face US withholding taxes on certain types of US income.
Business Owners and Entrepreneurs With Interests in Both Countries
Running a business across the US and UK creates complex tax reporting obligations. US persons operating businesses in the UK must comply with both HMRC and IRS regulations, including reporting foreign business income and filing forms such as Form 5471 (for foreign corporations). Conversely, UK-based business owners earning income from US clients or operations may need to file a US tax return and comply with US withholding tax rules.
Industry-Specific Considerations for US-UK Dual Filers
Seafarers & Maritime Professionals
Seafarers working internationally often face dual tax obligations due to earning income in multiple jurisdictions. The UK has a Seafarers' Earnings Deduction (SED) that may exempt qualifying income from UK tax, but US citizens and Green Card holders must still report worldwide income to the IRS. Determining tax residency for seafarers depends on factors such as time spent in each country and employer location. If a seafarer spends more than 183 days in the UK, they may be classified as a UK tax resident and need to file with HMRC in addition to their US tax return (Form 1040).
IT & Remote Workers Across Borders
With the rise of remote work and digital nomadism, IT professionals working across the US and UK must determine their tax residency status under the Statutory Residence Test (SRT) in the UK and citizenship-based taxation in the US. If a US citizen or Green Card holder resides in the UK while working remotely for a US-based company, they must report income to both HMRC and the IRS. Conversely, UK citizens working remotely for a US company while living in the UK may need to file a US tax return if they have US-sourced income.
Creative Industry Professionals (Actors, Musicians, & Artists)
Actors, musicians, and creative professionals often work internationally, making them subject to dual tax reporting obligations. If a US citizen performs in the UK, their UK earnings are taxed under HMRC rules but must also be declared on a US tax return. Similarly, UK citizens earning royalties or performance fees in the US may be liable for US federal and state taxes. The US-UK Tax Treaty helps allocate taxing rights, but withholding tax rules on royalties, performance fees, and licensing income must be carefully managed to avoid overpayment.
Medical Professionals & NHS Employees
US expat doctors, nurses, and medical consultants working in the UK face dual filing requirements due to the US's citizenship-based taxation system. UK-based medical professionals must file a US tax return (Form 1040) while also reporting their NHS or private practice income to HMRC. The taxation of NHS pensions and private healthcare earnings varies under the US-UK Tax Treaty, and US citizens may need to apply foreign tax credits (FTC) or exclusions to avoid double taxation. Similarly, UK citizens moving to work in the US healthcare system may face state-specific tax obligations alongside federal tax filing./p>
Military & Government Employees
Military personnel and government employees stationed abroad may have special tax exemptions and unique filing rules under the US-UK Tax Treaty. Generally, income earned as a US military service member or US federal government employee abroad remains taxable by the IRS but may be exempt from UK taxation. UK nationals working in diplomatic or military roles in the US may be exempt from US taxation on official earnings but still have to file with HMRC if they remain UK tax residents. The US Foreign Earned Income Exclusion (FEIE) does not apply to government wages, requiring individuals to carefully manage their dual tax obligations.
How Tax Residency Affects Dual Filing Status
US Tax Residency Rules
The US follows a citizenship-based taxation system, meaning US citizens and Green Card holders must file a US tax return (Form 1040) regardless of where they reside. Even if a US citizen lives full-time in the UK, they remain tax residents of the US and must report worldwide income. Non-citizens may also be considered US tax residents if they meet the Substantial Presence Test (SPT), which applies to foreign nationals who spend a certain number of days in the US over three years.
UK Statutory Residence Test (SRT) and Tax Residency
The UK determines tax residency based on the Statutory Residence Test (SRT), which assesses an individual’s residency status based on days spent in the UK and other ties. If an individual spends 183 or more days in the UK within a tax year, they are automatically considered UK tax resident. Those who spend fewer days may still be considered residents if they have strong UK connections, such as a home, family, or work commitments. UK tax residents must declare worldwide income to HMRC, making it essential for dual filers to determine whether they qualify for split-year treatment or treaty benefits under the US-UK Tax Treaty.
Tax Implications of Moving Between the US and UK
A mid-year move between the US and UK can significantly impact tax obligations. US citizens moving to the UK remain subject to US worldwide taxation, but they may qualify for Foreign Earned Income Exclusion (FEIE) or Foreign Tax Credits (FTC) to offset UK tax liabilities. Conversely, UK citizens moving to the US may become US tax residents under the Substantial Presence Test (SPT), triggering US filing requirements
Partial-Year Residents & Split-Year Treatment
Individuals who move between the US and UK within a tax year may qualify for split-year treatment, which allows them to be considered residents for only part of the year in one country. The UK offers Split-Year Treatment to individuals who arrive in or leave the UK mid-year, preventing them from being taxed on worldwide income for the entire tax year. However, the US does not offer split-year treatment—US citizens and Green Card holders are taxed on worldwide income for the full year, even if they relocate.
What Are the Filing Requirements for US-UK Dual Filers?
US Tax Return Filing (Form 1040 & Related Forms)
US citizens and Green Card holders must file Form 1040 with the IRS annually, regardless of where they live. Dual filers must report worldwide income, including:
Foreign wages, self-employment income, and pensions.
Rental income, dividends, capital gains, and interest earned abroad.
Foreign tax credits (FTC) or Foreign Earned Income Exclusion (FEIE) may apply to reduce US tax liability.
Additional forms may be required:
Form 2555 – To claim the Foreign Earned Income Exclusion (FEIE).
Form 1116 – To claim the Foreign Tax Credit (FTC).
Form 8938 – To report foreign assets under FATCA (if applicable).
Form 5471 – If holding ownership in foreign corporations.
Form 8865 – If involved in a foreign partnership.
UK Tax Return Filing (HMRC Self-Assessment)
US-UK dual filers may need to file a UK Self-Assessment tax return if they:
Earned income over £100,000, which requires mandatory filing, or have untaxed income that is not collected via PAYE.
Are self-employed or receive rental income in the UK.
Have dividends or investment income exceeding UK thresholds.
Are claiming tax reliefs that require a return (e.g., Foreign Tax Credit for US taxes paid).
UK tax returns must be filed online by January 31st following the tax year-end (April 5th).
FATCA & FBAR Reporting for Dual Filers
US citizens and Green Card holders must disclose foreign bank accounts and financial assets if they exceed reporting thresholds:
FBAR (Foreign Bank Account Report – FinCEN Form 114) must be filed if foreign accounts exceed $10,000 at any point in the year.
FATCA (Form 8938) is required if foreign assets exceed $200,000 (for single filers abroad) or $400,000 for joint filers abroad).
FBAR penalties can reach $10,000 per violation, making compliance essential. FATCA reporting extends to foreign pensions, trusts, and certain investments, meaning UK pensions may need to be reported.
Determining If You Need to File in Both Countries
Dual filers must determine their US and UK tax residency status to assess their filing obligations.
US Citizens & Green Card Holders
Must always file a US tax return (Form 1040), regardless of residency.
UK Residents
Must file with HMRC if they meet the Statutory Residence Test (SRT) or earn UK income.
Income Sources
Those earning in both countries must declare worldwide income and claim treaty benefits where applicable.
Foreign Account Balances
If assets exceed FATCA or FBAR thresholds, additional reporting is required.
How to Stay Compliant as a US-UK Dual Filer
Managing dual tax obligations effectively requires careful tracking of deadlines, residency status, and expert guidance.
Keeping Track of Filing Deadlines in the US & UK
US-UK dual filers must meet tax deadlines in both countries to avoid penalties:
US Deadlines
April 15th
Standard Deadline for filing form 1040
June 15th
Automatic extension for expats living abroad.
October 15th
Extended deadline for those who file Form 4868.
FBAR Deadline
Due April 15 (automatic extension to October 15 if missed).
UK Deadlines
April 5th
End of the UK Tax year
October 31st
Paper Self-Assessment deadline..
January 31st
Online Self-Assessment filing deadline.
July 31st
Second payment on account (if applicable).
Failing to file on time can result in penalties and interest charges.
Managing Tax Residency & Avoiding Issues
Understanding and documenting tax residency status helps prevent errors in dual tax filings:
US Residency Rules
Citizenship-Based Taxation -US citizens and Green Card holders must file taxes regardless of where they live.
Substantial Presence Test (SPT) – Foreign nationals may become US tax residents if they meet the 183-day rule over a three-year period.
UK Residency Rules
Statutory Residence Test (SRT) – Determines UK residency based on days spent in the UK and significant ties (home, work, family).
Split-Year Treatment – May apply if moving to or from the UK mid-year.
Avoiding Residency Mistake
Track days spent in each country to prevent unintentional tax residency.
Maintain proper documentation of work contracts, travel records, and homeownership.
Use the US-UK Tax Treaty to determine primary residency status and prevent double taxation.
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