Webinar – The US Buyers’ Guide: Understanding Tax Considerations When Purchasing in the UK

1024 731 Middleton Advisors

In collaboration with Maseco Private Wealth, Middleton Advisors explored the key financial considerations facing US citizens investing in the UK property market.

In the latest webinar in the Middleton Tax Series, Ashley Wilsdon, Head of London Buying, was joined by James Sellon and Terence Sivakumar of Maseco Private Wealth, specialists in cross-border wealth and tax planning. Chaired by Juliette Stacey, the discussion focused on how American buyers can navigate the complexities of UK property ownership — from buying structures and stamp duty to inheritance tax, currency risk, and capital gains.

With renewed interest from American families relocating to the UK — often driven by education, career moves, and lifestyle — the panel highlighted how careful planning can prevent costly tax mismatches and ensure property purchases are structured efficiently on both sides of the Atlantic.

Key Takeaways

1. Keep ownership structures simple.

US buyers often consider purchasing through LLCs, companies, or trusts, but these can cause tax mismatches between US and UK systems. As James Sellon explained, “US LLCs are deeply unattractive with regards to US and UK taxation.” In most cases, “it’s better to be simple and keep property in one’s own name.” Complex ownership — such as via a company or trust — can trigger additional annual or periodic charges and create double-taxation risk.

2. Understand dual taxation.

As James outlined, “as an American person living in the UK, you have two tax regimes looking over your assets.” US citizens must continue filing to the IRS wherever they live, while also being subject to UK taxes on global income and gains after four years of residency. Dual filing can be intricate and requires professional coordination to avoid duplication or missed credits.

3. Plan for stamp duty and surcharges.

Stamp Duty Land Tax (SDLT) applies to all UK property purchases, reaching 12% above £1.5 million. There is also a 3% surcharge for second homes and, as **Ashley Wilsdon** reminded viewers, “an international overseas-buyer surcharge on stamp duty — so it’s really important to have that conversation early doors so you understand what is payable.”

4. Know the “four-year FIG regime”.

From April 2025, a new Foreign Income and Gains (FIG) regime allows Americans moving to the UK to enjoy up to four years without paying UK tax on their foreign investment income and gains — provided they haven’t been UK tax resident in the previous ten years. After that four-year period, worldwide assets fall under UK taxation. James noted, “It actually makes the whole process easier for Americans because they can come to the UK first, rent for a year, and not suffer these horrendous tax consequences,” though he cautioned that staying longer than four years means reviewing one’s affairs carefully. Importantly, foreign income and gains during those four years can be brought to the UK without triggering additional tax charges — a significant improvement over previous rules.

5. Take care when transferring funds.

Remitting money from the US to the UK can trigger a tax charge if those funds contain untaxed income or gains. As James warned, “Before you move money between the US and the UK, please obtain tax advice — talk to your wealth-management team before you bring money to the UK.” Under previous rules, remitted funds could face tax liabilities as high as 40–60%, depending on investment type and exchange-rate movements.

6. Mortgages and currency movements have tax implications.

Exchange-rate changes can create taxable “paper gains” when repaying or refinancing loans. James explained that if sterling weakens, “the IRS may treat the reduction in the size of your loan as income — and that can be a dry tax charge.” The panel advised exploring repayment or offset mortgages and consulting both mortgage and tax advisers before refinancing.

7. Rental income and deductions differ across jurisdictions.

The US allows full mortgage-interest and depreciation deductions, whereas in the UK only a 20% tax credit applies. This mismatch can lead to higher effective taxes in the UK. Coordinating filing dates — the UK tax year runs April to April, the US on a calendar year — helps align credits and reduce over-payment risk.

8. Estate and inheritance thresholds vary dramatically.

In the US, the estate-tax exemption is around $15 million per person; in the UK, inheritance tax applies to estates above £325,000 (£500,000 including the residence nil-rate band). James cautioned: “If you are an American person married to a non-US person, you can get caught out with regards to the spousal exemption.” Having both US and UK Wills in place can help ensure assets pass according to your wishes and avoid probate complications.

9. Keep detailed records.

Maintain records of purchase costs, renovations, and mortgage interest to support capital-gains calculations and deductions across both tax regimes.

10. Obtain holistic advice before acting.

As James Sellon emphasised, “People act first and think second. Before you move money from the US to the UK, before you remortgage, before you undertake an activity — check first.” Terence Sivakumar added: “We can’t really stress highly enough the importance of getting holistic advice at each step of the property-ownership and management cycle.”

For tailored cross-border financial and tax planning, contact Maseco Private Wealth.

Download the presentation slides here.