Why American Wealth Continues to Flow Through London

London has long held a particular appeal for Americans. Despite political shifts, tax reform, and global uncertainty, the city continues to attract entrepreneurs, senior executives, families, and retirees who value its international outlook, cultural depth, education system, and familiarity of language. 

From our vantage point, advising Americans living in the UK, there is certainly no shortage of demand. And as long as the US maintains citizenship-based taxation, Americans abroad will continue to need specialized, cross-border advice. That need has not diminished, and if anything, it has become more prevalent.

Why US Tax Complexity Never Goes Away

US tax returns are fundamentally different from those in the UK and most other jurisdictions. They are not simply a domestic filing with an international requirement. They are complex, layered, and carry risk, which can be unforgiving and costly if handled incorrectly.

Americans living in the UK must navigate issues such as:

• Different income “baskets” and foreign tax credits, whilst considering double taxation agreements and the application of high-tax kick-out*
• Phantom gains arising from capital repayments of non-USD denominated mortgages
• Punitive tax treatment of non-US collective investments (e.g. PFICs)
• Extensive reporting requirements for anything considered “foreign”
• Foreign bank accounts, pensions, investment companies, trusts, and even everyday savings structures can trigger reporting obligations, and in some cases, significant penalties if missed.

Many Americans are compliant but highly mobile. Ironically, one of the most common requests we hear is a desire for continuity. Clients want advisers who can move with them as their lives and residences change.

Alongside this group, we continue to see a steady flow of newly UK-resident Americans and so-called “accidental Americans.”

Accidental Americans and the Legacy of FATCA

Accidental Americans are individuals who acquired US citizenship without fully understanding it, or sometimes without knowing it at all. This can occur if someone was born in the US to non-US parents who later returned home, or if they were born abroad to a US citizen parent.

The Foreign Account Compliance Act (FATCA) has brought many of these individuals into the system, often unexpectedly and abruptly. The distinction between wilful and non-wilful failure to comply is critical in determining penalty exposure, often with legal advice being required alongside tax support. These are rarely straightforward cases, regardless of income or asset levels.

Is the UK Still Attractive For Americans?

Despite headlines to the contrary, the UK remains an attractive place for Americans to live. It is a truly global city with an international workforce, world-class culture, strong education, healthcare and lifestyle advantages.

That said, recent changes to the UK’s non-dom regime have undoubtedly prompted reassessment.

The Impact of Non-Dom Reform and Why Americans Are Different

We have seen an increase in Americans leaving the UK, but relative to other nationalities, Americans are often impacted less. US citizens already carry a baseline level of taxation regardless of where they live. For many non-US individuals, the remittance basis previously meant that offshore income and gains could be sheltered from UK tax, something Americans have never enjoyed in the same way.

That does not mean the changes are irrelevant. Planning opportunities existed during the transition period, and many clients took advantage of them. However, the most difficult and most emotive issue has been inheritance tax.

The contrast between the UK’s modest inheritance tax (IHT) threshold and the far more generous US estate tax exemption is stark. In addition, the removal of protections for internationally mobile individuals risks driving away significant private wealth, with long-term consequences for the UK economy.

At present, many individuals can still undertake inheritance tax planning through relatively straightforward lifetime gifting strategies. Potentially exempt transfers (PETs) remain powerful, outlive the gift by seven years, and it falls outside the taxable estate. In some respects, this is more favourable than the US lifetime gift and estate tax regime. Whether this remains intact in future budgets is an open question.

Where Are People Looking Instead?

Italy and the UAE are being mentioned more than ever before. However, tax is rarely the only driver. Many individuals have established lives in the UK, children in education, businesses, social ties, or settled status, and are understandably reluctant to leave altogether. What we are increasingly seeing is careful consideration of UK residence rules, with some individuals exploring non-resident status while retaining meaningful ties to the UK where possible. The world is smaller than it has ever been, and mobility is now part of long-term planning.

Industry data suggests a significant surplus of capital moving into the US for business expansion and a corresponding deficit from the UK perspective. That aligns with what we see in practice.

The replacement of the non-dom regime with the Foreign Income and Gains (FIG) regime is likely to encourage more short-term UK assignments and, conversely, more long-term departures. Stability matters. The internationally mobile population contributes significant tax revenue, and policy uncertainty risks deterring precisely the talent and capital the UK wishes to attract.

Do Political Factors Play a Role?

We approach this topic carefully. Tax advisers do not engage in political debate. That said, we do hear political motivations cited more often than in the past.

We are seeing Britons returning to the UK after long periods in the US, alongside Americans either moving to the UK or, at the other end of the spectrum, formally renouncing US citizenship

Some of these individuals are well into their later years, where expatriation offers little economic benefit and can even complicate estate planning. Yet for them, the decision is deeply personal, about identity, certainty, and severing ties they no longer feel connected to.

Who Do We Work With?

Our clients share the common trait of cross-border complexity. That can apply to almost any American living outside the US.

We advise entrepreneurs, senior executives, trustees, retirees, and families. We prepare both US and UK tax returns and provide integrated advisory support from both sides of the Atlantic.

Complexity does not scale neatly with wealth. In fact, those with more modest means can sometimes be the most exposed, having received little or no advice early on. We regularly see accidental Americans holding UK pensions treated as foreign trusts, ISAs containing punitive US-taxed investments, or historic compliance gaps that require careful and costly remediation.

Recent areas of increased interest include expatriation, pension planning, and international business expansion.

Building Long-Term Relationships

Our clients often seek long-standing advisory relationships. We aim to be a trusted adviser not only to our clients, but to their children as well.

Life events,  such as marriage, divorce, inheritance, and relocation, can have unexpected US tax consequences. Everyday decisions can carry implications that are not obvious without specialist advice. Our role is to raise awareness, manage expectations, ensure compliance, apply treaty protections, and prevent avoidable tax issues before they arise.

For Americans in the UK, cross-border tax is not a one-off exercise, but rather an ongoing conversation.

Please contact us if you have any questions or need advice from our team.

Article by Glenn Snow

*The High-Tax Kick-Out (HTKO) is an IRS provision that prevents taxpayers from using foreign tax credits on highly taxed passive income to artificially reduce US tax liability. It reclassifies passive income as general category income when the foreign tax rate exceeds the maximum US rate, impacting Form 1116 calculations.