global Tax How Brexit Has Changed the Tax Landscape for U.S. Expats Living in the U.K. August 26, 2025 Are you a U.S. expat living in the U.K.? The Post-Brexit U.K. tax landscape could mean higher taxes and reporting complexities. Here’s what you should know. On January 30th, 2020, the U.K. officially withdrew from the European Union. After the COVID-19 pandemic and change in party leadership, we are arguably just now seeing the impact Brexit has had on the tax landscape of U.S. and other foreign expats living/working in the U.K. In October 2024, Chancellor of the Exchequer Rachel Reeves announced a huge shake up to the U.K. tax regime; the end of the non-domicile tax. If you're a U.S. citizen or Green Card Holder living in the U.K., these changes could mean higher taxes, stricter compliance, and immediate tax planning. Are you prepared?Quick TakeawaysThe U.K.’s Foreign Income and Gains (FIG) regime replaces the long-standing non-dom rules on April 6, 2025, offering four years of foreign income and gains relief for qualifying new residents.U.S. expats may face higher U.K. taxes and expanded worldwide income reporting once FIG relief ends.The shift to residence-based inheritance tax could have lasting estate planning implications, even after leaving the U.K.U.S. citizens must still meet all U.S. tax and foreign asset reporting obligations, making coordinated cross-border planning essential.What is a Non-Dom?A non-domicile, or non-dom, is a resident of the U.K. whose permanent home (domicile) is another country. Changes To the U.K Tax SystemThe old non-domiciled (non-dom) regime, which had been in place for over 200 years, taxed U.K. non-domiciles only on money they earn in the U.K., allowing them to be exempt from foreign income and gains unless remitted into a U.K. bank account. For higher and additional rate taxpayers, this meant tax savings of 40-45%. From April 6th, 2025, the old non-dom regime was replaced by the Foreign Income and Gains (FIG) regime.Under the FIG regime, new U.K residents, including British domiciles, will benefit from 100% relief on foreign income and gains during their first four years of tax residence; provided they have not been a U.K. tax resident in any of the 10 consecutive years prior to their arrival.Taxpayers currently utilizing the remittance basis may benefit from the FIG regime in any year they remain within the 4-year residence period. Summary Table of Old Non-Dom Regime and FIG Regime Key AreaPre-April 2025Post-April 2025Tax on Foreign IncomeOnly taxed when income is remitted to the U.K. (if taxpayer is a U.K. non-dom)Four-year FIG exemption, them worldwide income taxedInheritance Tax (IHT)Based on domicile statusBased on long-term residence; U.K. IHT tail may apply post-departureThough the new legislation has not resulted in any amendments to the U.S./U.K. Estate Tax Treaty, careful consideration and planning may be needed. Since the Treaty is based on an individual’s domicile, it remains unclear how the Treaty articles have been impacted by the switch to a residence-based inheritance tax system post April 2025. “As U.S. expats in the U.K. face the end of the non-dom regime, the biggest risk I see is waiting too long to act. Coordinated planning now, before FIG relief lapses, can make the difference between smooth compliance and costly surprises.” - Catherine Findlay, Manager, International Tax Services Tax Impact on U.S Citizens Living Abroad U.K. tax residents who have exceeded four years of residence from April 6th, 2025, are now subject to tax on their worldwide income and gains. With U.K. tax rates reaching as high as 45%, steps taxpayers can take to save time and money include:Pre-immigration planning for new inbound U.K. residents or assigneesEstablish a relationship with your U.S. and U.K. tax advisors to ensure foreign tax credits are being appropriated to the correct jurisdiction Your U.S. financial advisors will need to be made aware of the changes as non-reporting funds have harsh tax implications in the U.K.In general, having a non-U.S. income may trigger any of the following reporting obligations:FinCEN Form 114 (FBAR)Form 8938Form 3520Form 8621Form 1116Form 2555Form 8858 Form 5471FAQs: U.S. Expats and the U.K.’s FIG Regime1. Does the FIG regime affect U.S. expats who moved to the U.K. before April 6, 2025?It can. If you’re still within your first four years of U.K. tax residence on that date, you may qualify for the FIG relief period.2. Will the FIG regime change my U.S. tax filing requirements?No, U.S. citizens and Green Card holders must still report worldwide income to the IRS, even if it’s exempt under U.K. rules.3. Can the FIG regime help reduce double taxation?It may for the first four years, but once FIG relief ends, coordinated planning with an advisor is key to maximizing foreign tax credits.It’s important to be prepared for the changes whether you’re planning a move or have concerns about how the new changes could impact your U.S. taxes.Have questions about how these changes may affect you? Our International Tax Services group is here to help you plan with clarity and confidence.
