Moving to the UK from the US? How to maximise the new 4-year "FIG" tax holiday

US applications for UK citizenship surged by a third in the first half of 2025 compared with 2024. This reflects a broader trend of Americans relocating and building their lives in the UK.

However, moving from the US to the UK involves more than a change of address. It triggers complex US and UK tax rules. As a US citizen, you remain liable for IRS taxes on your worldwide income, no matter where you live.

From remittance to FIG: What US expats need to know

For decades, US citizens moving to the UK relied on the remittance basis to manage dual-tax exposure. That changed on 6 April 2025, when the UK replaced it with a residence-based system called the Foreign Income and Gains (FIG) regime.

At Sable Wealth, we guide US citizens through this transition. Careful pre-departure planning unlocks FIG reliefs and reduces long-term UK inheritance tax risks.

Our cross-border wealth planning and advisory services provide tailored financial guidance for Americans, helping you protect and grow your wealth across jurisdictions.

The UK four-year window

The FIG regime provides a four-year relief period for qualifying new residents, those who have not been UK resident in the past 10 years.

Full relief: By opting into FIG for your first four UK tax years, you can receive 100% relief on certain foreign income and gains. This is not automatic; you must choose it. Opting in means forfeiting UK tax-free allowances such as the Personal Allowance and Capital Gains Tax allowance.

Bring funds freely: Unlike the old remittance rules, you can bring foreign income or gains into the UK to fund your lifestyle or buy property without triggering a UK tax charge.

After four years: Once the four years end, worldwide income and gains are taxed like any other UK resident. For example, selling a US stock in Year 3 under FIG could incur no UK tax, but waiting until Year 5 would trigger full UK Capital Gains Tax.

Protect your estate from UK Inheritance Tax

The 2025 reforms also shift Inheritance Tax from “domicile” to “long-term residence.

• The 10-year rule: Spending 10 out of 20 years as a UK resident brings your global estate into the UK IHT net at 40% over the threshold.
• The departure tail: Leaving after long-term resident status may leave you exposed to UK IHT for up to 10 years.

Early planning, often leveraging the US/UK Estate Tax Treaty, can help reduce this exposure.

US tax obligations remain

While FIG offers a generous relief period, US tax responsibilities continue. Many clients ask, “If I’m not paying UK tax for the first four years, am I tax-free?” For Americans, the answer is usually no. US taxes are based on citizenship, not residency, meaning worldwide income must still be reported to the IRS.

Key points:

• Citizenship-based taxation: The IRS taxes all global income, regardless of where you live.
• Treaty savings clause: The US-UK tax treaty allows the IRS to tax citizens as if the treaty did not exist, preventing double non-taxation.
• No tax vacuums: UK relief does not hide income from the IRS.

Protect your investments

The IRS treats many UK mutual funds or ISAs as Passive Foreign Investment Companies, which can trigger tax rates over 50% and complex reporting. US tax-free wrappers are not always UK-friendly.

We help design structures that the IRS recognises as transparent and compliant in the UK, protecting your growth from phantom gains and excessive reporting.

The FIG regime simplifies short-term relocation, but without a clear four-year strategy, US expats risk tax leakage when moving into long-term residency.

Plan ahead for cross-border success

By planning before you relocate, you can:

• Time the realisation of gains
• Restructure trusts efficiently
• Build compliant, tax-efficient portfolios

This ensures you preserve benefits in both the US and UK while avoiding double-reporting traps.

Secure your financial future before you move across the Atlantic. Partner with advisers who combine UK expertise with full US compliance, guiding your wealth through every cross-border complexity. Contact us today by email [email protected] or give us a call on +44 (0) 20 7759 7519.