Do Americans living in the UK have to file a US tax return?

Yes. US citizens and green card holders are taxed on worldwide income regardless of where they live. An American in the UK files Form 1040 each year reporting UK and US income alike, even if no US tax is ultimately owed.

Which schedules does an American in the UK typically file?

Most need Schedule B (interest, dividends, and the foreign-accounts question that triggers the FBAR). Schedule C covers self-employment, Schedule D capital gains, Schedule E rental income, and Schedule SE self-employment tax. The exact schedules depend on income sources.

What is the difference between Form 1040 and Form 1040-NR?

Form 1040 is for US citizens and green card holders, taxed on worldwide income regardless of residence. Form 1040-NR is for non-resident aliens with US-source income. An American in the UK files Form 1040.

Do I report my UK salary if I pay UK income tax through PAYE?

Yes. UK employment income is reportable on Form 1040 regardless of PAYE deductions. The UK tax paid generates a Foreign Tax Credit on Form 1116, which typically offsets the US liability. PAYE does not discharge the US filing obligation.

Is a UK ISA reportable on Form 1040?

Yes. The IRS does not recognise the ISA wrapper. Income and gains inside a Stocks and Shares ISA are fully reportable on Form 1040. Most UK funds inside ISAs are also PFICs, carrying additional reporting and a more complex tax treatment.

Form 1040 for Americans Living in the UK: A Practical Guide

Q: How does the Foreign Tax Credit work on Form 1040?

Form 1116 provides a dollar-for-dollar credit against US tax for UK income tax paid on the same income. Because UK rates are generally at or above US rates, the credit typically reduces the US liability to zero for employed Americans. Excess credit carries forward up to ten years.

Every American living in the UK is required to file a US federal tax return each year. Form 1040 is the core of that return. This guide covers what the form includes, which schedules apply to typical UK-resident situations, and how the main relief mechanisms work.

The short answer

US citizens and green card holders in the UK file Form 1040 reporting worldwide income — UK salary, savings, rental income, and investments. Form 1116 (Foreign Tax Credit) then offsets UK tax paid against the US liability, reducing the US bill to zero for most employed Americans. The filing obligation exists even when no additional US tax is owed.

Why the obligation exists

The US taxes citizens and permanent residents on worldwide income regardless of where they live. Moving to the UK does not suspend this. An American who has lived in London for decades and has no US-source income whatsoever still files Form 1040 each year. This is not double taxation in practice — the Foreign Tax Credit is designed to prevent it — but it is a separate annual filing obligation.

What Form 1040 covers

Form 1040 reports all income worldwide, converted to US dollars at the IRS average annual rate. It calculates deductions and credits, applies the Foreign Tax Credit or FEIE, and determines whether additional US tax is owed or a refund is due. For an American in the UK, income typically includes UK employment income, self-employment income, bank interest, dividends, rental income, and capital gains — all in US dollars.

The Foreign Tax Credit

Form 1116 generates a dollar-for-dollar credit against US tax for UK income tax paid on the same income. Because UK rates are generally at or above US rates, the credit reduces the US liability to zero for most employed Americans. Excess credits carry forward up to ten years.

The Foreign Tax Credit is one of two main routes to relief. The other is the Foreign Earned Income Exclusion (Form 2555), which excludes a capped amount of earned income from US tax. The two interact in complex ways and the better choice depends on income type and future plans. Our FEIE vs Foreign Tax Credit comparison covers the decision in detail.

Key schedules for Americans in the UK

Schedule B reports interest and dividends and asks whether you hold foreign financial accounts — the question that triggers the FBAR obligation. Most Americans in the UK with UK bank or investment accounts need to complete it.

Schedule C reports self-employment income and expenses. A self-employed American in the UK reports their UK business here in US dollars.

Schedule D reports capital gains and losses. Gains on UK shares, funds, and property are reported here in US dollars, with the cost basis measured at the dollar value on the purchase date. Currency movement between purchase and sale creates a separate US gain or loss from the sterling position.

Schedule E reports rental income. UK buy-to-let income goes here. US depreciation rules apply even where HMRC uses different treatment.

Schedule SE calculates self-employment tax on net earnings. The US-UK totalization agreement can exempt UK-resident self-employed individuals where UK National Insurance is already being paid.

Information returns alongside Form 1040

FBAR (FinCEN Form 114): Separate from the tax return, filed with FinCEN when aggregate foreign financial accounts exceed $10,000 at any point in the year.

Form 8938: Reports specified foreign financial assets above FATCA thresholds. Filed with the return; thresholds are higher for those living abroad.

Form 8621: Required for each PFIC interest — broadly any UK-domiciled fund or investment trust. For more, see our ISA and UK investment guide.

Form 8833: Used to claim a treaty-based position where the US-UK treaty modifies the default tax treatment.

Deadlines

Americans abroad get an automatic two-month extension to 15 June, with a further extension to 15 October available on request. Any tax owed accrues interest from 15 April. For full deadline detail, see our US tax filing deadlines guide.

A note on this guide

This covers the general framework. The correct approach for your specific situation depends on your income mix, investment profile, and individual circumstances.