In this episode of US-UK Tax Talk, host Aidan Grant does things a little differently and becomes a guest on his own show. He is joined by Nathan Prior and Kat Smilewicz of Partners Wealth Management, with Nathan stepping in as guest host, to discuss what the UK’s 2025 tax changes mean in practice for Americans moving to the UK and for British expats returning home.

The discussion focuses on the practical realities that arise before and after a move. The conversation begins with UK tax residence under the Statutory Residence Test and why the precise timing of becoming UK tax resident can significantly affect exposure in the first year. The panel also explains split-year treatment and how UK and treaty residency rules interact in cross-border scenarios.

A key focus of the episode is the new Foreign Income and Gains (FIG) regime, introduced from April 2025. The regime can provide qualifying individuals with a four-year period of exemption from UK tax on foreign income and gains, including returning British expats who meet the residence conditions. The discussion highlights that while the rules are more objective than the previous domicile-based system, timing of arrival is critical, as the four-year period begins from the first year of UK residence.

Much of the conversation is dedicated to pre-arrival planning. The speakers emphasise the importance of reviewing trusts, corporate structures, investment portfolios and pension arrangements before becoming UK resident, as certain structures are not protected under the FIG regime and may create immediate UK tax exposure. They also explore how coordinated advice across UK and US tax and legal systems is often essential to avoid unintended consequences.

The episode also highlights common pitfalls when bringing wealth into the UK. US and UK tax treatment frequently diverges, particularly in relation to revocable trusts, LLCs, intra-family loans and the proceeds of US asset disposals. These differences can become especially significant when funding a UK property purchase, where both the source and routing of funds can have wider tax and reporting implications.

The speakers also consider opportunities created by the new regime, including planning within the four-year FIG window and the Temporary Repatriation Facility, which may allow certain historic foreign funds to be brought into the UK at a reduced tax rate. However, they stress that these opportunities are highly fact-specific and depend on proactive planning rather than assumptions about time.

US-UK Tax Talk is released on the first Wednesday of every month.

For questions or feedback, please contact us: usuktaxtalk@collyerbristow.com

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https://podcasts.apple.com/gb/podcast/us-uk-tax-talk/id1570411216

Key Take Aways

When do I actually become UK tax resident, and why does the start date matter so much?
UK tax residence is determined tax year by tax year under the Statutory Residence Test. That means if you trigger UK residence part way through a tax year, you can be treated as resident from 6 April unless split-year treatment applies. That start date matters because it can bring forward UK tax exposure and can also shorten the period during which you benefit from the new FIG regime.

What is the FIG regime, and who can benefit from it?
The Foreign Income and Gains regime was introduced from April 2025 and can give qualifying new arrivals a four-year exemption from UK tax on foreign income and gains. It is available not only to non-UK nationals but also to returning British expats, provided they have not been UK resident for four of the previous ten tax years. The rules are more objective than the old domicile regime, but the timing of arrival is critical because the four years run from the tax year of first UK residence.

What should Americans and returning expats do before moving to the UK?
The strongest message from the episode is to plan before arrival, not after. Trusts, companies, portfolios, pensions and even house-purchase funding should all be reviewed in advance, because some structures are not protected by the FIG regime and can create UK tax exposure as soon as residence begins. A coordinated plan between legal, tax and financial advisers can also help decide what to realise, restructure or draw down while the UK treatment is still favourable.

What are the biggest traps people miss when bringing money into the UK?
A recurring theme is that US and UK tax rules often do not line up, even when the arrangements sound familiar. Money coming from a revocable living trust, an LLC, a parental loan, or the sale of US assets can have very different UK consequences from the US treatment people expect. That is especially important where someone is bringing funds to the UK to buy a home, because the source and route of the money can affect both immediate tax costs and longer-term inheritance tax exposure.

What opportunities do the new rules create for people already in the UK?
For some longer-term UK residents who previously relied on the remittance basis, the Temporary Repatriation Facility may offer a valuable chance to bring formerly protected overseas funds into the UK at lower tax rates. The episode also highlights that the new regime can give Americans in the UK a period to restructure portfolios, sell foreign assets more efficiently, or draw funds while still outside the scope of normal UK tax on foreign income and gains. But these opportunities are highly fact-specific, and the speakers stress that using them well depends on active planning rather than assuming four years is plenty of time.

Chapters:

00:00 – Introduction and the “False Sense of Security” in US-UK Tax

01:00 – Welcome and Guest Introductions: Partners Wealth Management

03:51 – Determining UK Residency: The Statutory Residence Test (SRT)

06:11 – Split-Year Treatment and Treaty Residency Status

10:00 – The New 2025 FIG Regime: A 4-Year Tax Holiday

12:13 – Who Qualifies? Benefits for Americans and Returning British Expats

13:46 – The Importance of Pre-Arrival Planning: Trusts and Companies

24:26 – Corporate Residency: Accidentally Importing a US Company

26:10 – Building a Financial Plan: Cash Flow Modeling and US Pensions

30:45 – Protected Structures: Family-Made Wealth vs. Self-Made Wealth

33:52 – Buying Property in the UK: Portfolios and Reporting Funds

40:13 – Maximizing the 4-Year Window: Pensions, Dividends, and Churning Assets

45:58 – The End of the Remittance Basis: A New Era for Wealth Management

47:22 – The Temporary Repatriation Facility (TRF): 12% Flat Tax Rate

51:25 – TRF Pitfalls for Americans: IRS and Foreign Tax Credits

53:10 – Inheritance Tax Changes: The New 10-Year Worldwide Rule

56:28 – Final Advice and Closing Remarks