Relocating from the US to the UK?

Yes, potentially. The default position is that a person who is tax resident in the UK must pay tax on their worldwide income and capital gains. If, however, you qualify for the ‘foreign income and gains’ (FIG) regime, you can claim full relief against UK tax on most forms of non-UK source income and gains during your first four years of UK tax residence. Broadly speaking, you should be eligible for the FIG regime if you were not UK tax resident for at least ten consecutive tax years prior to your move to the UK.

In the case of a US citizen or resident, your exposure to UK tax may be limited further by the application of the US-UK income tax treaty, for instance, if you can establish that you are US resident for treaty purposes.

Yes, potentially. If you are a ‘long term resident’ of the UK (an LTR), your worldwide assets will be exposed to UK inheritance tax (IHT) on death. If you are not an LTR, only your UK assets (and non-UK assets deriving value from UK residential property) will be exposed to IHT. With limited exceptions, you will be an LTR if you have been UK resident in ten or more of the past 20 tax years. If you are moving to the UK for the first time, you will become an LTR from the beginning of your eleventh consecutive tax year of UK residence.

Subject to available exemptions and reliefs, IHT is charged at a flat rate of 40% on death to the extent that the value of your estate exceeds your available ‘nil rate band’ (NRB) amount of up to £325,000.

Yes, potentially. If you are an LTR, gifts of assets situated anywhere in the world could give rise to IHT. If you are not an LTR, only gifts of UK assets (and non-UK assets that derive their value from UK residential property) can give rise to IHT.

If you would otherwise be liable to IHT, outright gifts to individuals of any assets should pass free of IHT if you outlive the gifts by seven years (and a reduced rate of IHT should apply if you die more than three but less than seven years after making the gifts). However, other lifetime gifts (e.g. to a trust or company) will be immediately subject to IHT at a rate of 20% if, and to the extent that, they exceed your available NRB amount, increasing to up to 40% if you die within seven years of making them. As with tax on death, lifetime charges to IHT are subject to available exemptions and reliefs.

There are two treaties in place between the US and the UK, which are designed to avoid double taxation: one relates to the taxation of income and capital gains, and the other relates to the taxation of gifts and estates. Both operate by allocating taxing rights between the two countries and providing for a system of credits that allows tax paid in one country to be offset against a liability arising in the other. Further, in certain cases the treaties can confer exclusive taxing rights on one of the two jurisdictions.

However, the treaties can let the taxpayer down in particular situations, such as where there is a mismatch between the treatment in the US and the UK. This might occur, for instance, where the identity of the taxpayer is different in each country, or where the tax liability arises at a different time under the respective rules of each country. We can provide expert advice on how to navigate this issue and optimise your global tax position.

Yes, it is important to take UK advice before moving. In particular, if you are the trustee of a trust or a director of a company, steps may need to be taken to ensure that you will not inadvertently cause those structures or entities to become UK resident and subject to UK taxation.

To find out more, read our article here.

Purchasing a residential property in England & Wales involves the following steps:

1. Considering how the purchase will be structured and funded

   You will need to decide how to fund and structure the purchase, and in whose name to register the property. You should also ensure you have cash available to fund the deposit (typically 10% of the purchase price), which will be due on exchange of contracts, and Stamp Duty Land Tax (“SDLT”), which will be due on completion of the purchase. SDLT will be imposed on the purchase price at graduated rates of up to 19%, depending on a range of factors including the price, your residence status for SDLT purposes and whether you already own another residential property anywhere in the world.

2. Making an offer to purchase

   Once you have found a property you like, you will make an offer through the estate agent (acting for the seller) and, if accepted, the agent will circulate a memorandum of sale to your solicitors. The memorandum of sale sets out the property details and the terms of the offer (which are not legally binding until contracts are exchanged).

3. Undertaking due diligence

   Your solicitor will review all documentation provided by the seller’s solicitor relating to the property and undertake a series of searches with various public authorities. It is also recommended that you instruct a surveyor to inspect the property and check for any structural defects.

4. Exchange of contracts

   If you wish to proceed with the purchase, you will be asked to sign the sale contract, send the deposit to your solicitor and agree a date for completion with the seller. Completion will typically take place within a couple of weeks’ of exchange, but it can take place simultaneously or be delayed until much later in the parties’ discretion.

5. Completion

   On the day of completion, your solicitor will send the completion funds to the seller’s solicitor and, upon receipt, the seller’s solicitor will date the legal transfer and confirm that completion has taken place, at which point the keys will be released by the estate agents and you will be the proud owner of your new property!

Read our Residential Property FAQs to find out more about purchasing and selling residential property in the UK.

Generally, the answer to this question is ‘no’, as owning the UK home through a structure can give rise to adverse tax consequences. Where residential property is purchased for personal use, it is normally best to opt for direct personal ownership.