Most Americans don’t move to the UK thinking it’ll be forever. It usually starts small: a job contract, grad school, or following someone across the ocean. You arrive with an exit plan, maybe even a countdown. But then life builds. A child is born. You get promoted. You buy a flat or a house. Suddenly, you’ve built a life here and it’s starting to feel permanent.
But for U.S. citizens, settling in isn’t just about buying furniture. The IRS doesn’t forget you exist, and your obligations to the U.S. government don’t end just because your daily life does.
Visas, ILR, and Citizenship
Immigration is the first big step. Most Americans come on short-term visas, student, work, spouse. These work for a while but won’t carry you long-term.
After five years, you may be eligible for Indefinite Leave to Remain (ILR), which removes work restrictions and lets you stay without a ticking clock. A year later, many apply for British citizenship.
The UK and U.S. both allow dual citizenship, so you can hold both passports. That said, dual status means double bureaucracy. Two governments. Two tax systems. It’s not impossible but it can get messy fast.
The Tax You Didn’t Plan For
Here’s the kicker: the U.S. taxes you no matter where you live. Even if you’ve been in the UK for decades, you still need to file a U.S. return every year.
That usually means:
- Form 1040 (U.S. income tax)
- FBAR, if your foreign accounts total over $10,000
- FATCA, if your assets are above certain thresholds
- UK taxes, once you’re a UK resident
Thanks to tax treaties and exclusions, you usually won’t pay twice but the paperwork is relentless. Many long-term expats eventually hire a tax advisor just to stay sane.
Investing Isn’t So Straightforward
British financial tools don’t always play nicely with the IRS:
- ISAs: Tax-free in the UK, taxable in the U.S.
- UK mutual funds: Often classified as PFICs (subject to harsh U.S. tax treatment.)
- Pensions: Covered by treaty, but still complicated. Timing matters.
This doesn’t mean you can’t build wealth in the UK, it just means the default choices for Brits might not work for you. Some Americans keep their investments U.S.-based. Others plan around the reporting rules. Either way, you need a strategy.
Kids and Citizenship
If your child is born in the UK, they’ll likely be a dual citizen. That means they’ll inherit your U.S. tax obligations, even if they never live there.
Some parents view this as a privilege. Others aren’t so sure. It’s something to think about early, especially if U.S. college is on the table (hello, FAFSA) or if you’re navigating UK university fees.
Owning Property and Estate Planning
Buying property makes your expat life feel more permanent and complicated.
If you sell at a profit, both the U.S. and UK may want a slice. And when it comes to inheritance, the two countries treat estates very differently. If you plan to stay long-term, don’t wait to get proper estate advice.
Renouncing US Citizenship: Some Do, Some Don’t
Some Americans eventually consider giving up their U.S. citizenship. Why?
- The tax hassle never ends.
- UK investments are painful under U.S. rules.
- They want to spare their kids future reporting obligations.
- They feel more British than American.
Others hold on because:
- The exit tax. Renouncing costs $2,350 upfront, and if your net worth is over $2 million, you may face a huge “pretend” tax bill as if you sold everything the day before.
- Passport perks. A US passport still carries weight for travel and re-entry.
- Identity. For many, being American is tied to family, culture, and belonging.
- Manageable with help. With the right tax advisor, compliance can be tedious but not impossible.
Renunciation is permanent. For some, it’s a relief. For others, it’s a bridge too far.
Final Thought
Temporary stays have a way of turning into real lives. If you’re staying in the UK for the long haul, you’ll need to plan across borders for taxes, investments, family, and your future self.
The answers won’t be the same for everyone. But with the right planning and often, the right advice from Expat Tax Online, you can turn a life that started as temporary into one that feels both secure and truly your own.