Living and Working Abroad in London as a U.S. Expat
For many Americans, London is one of the most popular cities to live and work abroad. It’s English-speaking, culturally vibrant, and globally connected. But while moving to London can feel like an adventure, it also comes with adjustments—from how you work to how you manage your taxes.
Unlike back home, London has a different pace of life and work culture:
- Work-life balance: Londoners often take more vacation days than Americans and enjoy more public holidays.
- Healthcare: With the National Health Service (NHS), you’ll find healthcare is publicly funded—quite a contrast to U.S. insurance-based systems.
- Commutes: Public transport is efficient, and many expats rely on the Tube rather than cars.
- Work culture: Meetings may feel less rushed than in the U.S., and there’s an emphasis on teamwork and inclusivity.
Overall, many expats find the lifestyle in London refreshing compared to the U.S., though it does take some getting used to.
Is Working in London Different from the U.S.?
The short answer: yes. Salaries may sometimes be lower in London compared to equivalent roles in the U.S., but benefits like healthcare, pensions, and extended leave often offset the difference.
Here are some key comparisons:
| Aspect | U.S. | London (UK) |
| Healthcare | Private, employer-based | Public (NHS) with private options |
| Work Hours | 40–45 hours typical | 37–40 hours typical |
| Vacation | 10–15 days average | 20+ days standard |
| Taxes | Federal + state | HMRC PAYE (Pay As You Earn) system |
For many Americans, the adjustment is positive. Work feels less centered on constant hustle, and benefits make life more manageable.
Settling U.S. Taxes While Living in London
Here’s where things get complicated. As a U.S. citizen living abroad, you’re still required to file a U.S. tax return each year, even if you’re already paying UK taxes through HMRC. This is where filing US taxes in London becomes a unique challenge.
Step 1: Understand Your Obligations
- U.S. citizens and Green Card holders must report worldwide income.
- Even if all your income comes from the UK, it still goes on your U.S. return.
- You may need to file extra forms for foreign accounts or assets.
Step 2: Use Tax Benefits for Expats
- Foreign Earned Income Exclusion (FEIE): Exclude up to $126,500 (2024 limit) of income earned in London.
- Foreign Tax Credit (FTC): Credit for taxes paid to HMRC so you’re not double taxed.
- Foreign Housing Exclusion: If your housing costs in London are high, this may reduce your taxable income.
Step 3: Report Your Foreign Accounts
If your UK bank accounts exceed $10,000 at any point in the year, you must file an FBAR (Foreign Bank Account Report). FATCA rules may also apply if your assets cross higher thresholds.
Step 4: Know the Deadlines
- U.S. expats get an automatic extension to June 15 for filing.
- You can request an additional extension until October 15 if needed.
Practical Tips for Filing US Taxes in London
- Keep Records: Maintain proof of income, tax paid to HMRC, and housing expenses.
- Check Tax Treaties: The U.S.-UK tax treaty can help avoid double taxation, but it doesn’t eliminate the need to file.
- Don’t Miss Deadlines: Late filing can trigger penalties, even if you owe nothing.
- Hire a Specialist: Because filing US taxes in London is complex, many expats work with tax professionals who specialize in both U.S. and UK systems.
FAQs About Filing US Taxes in London
Q1: Do I have to file U.S. taxes if I’ve lived in London for 10+ years?
Yes. Citizenship-based taxation means you must file every year, regardless of how long you’ve been abroad.
Q2: Will I owe taxes to both the IRS and HMRC?
Not usually. Credits and exclusions often reduce or eliminate double taxation, but you must file to claim them.
Q3: What if I haven’t filed for years?
You may qualify for the IRS Streamlined Amnesty Program to catch up without penalties.
Q4: Do I report my UK pension to the IRS?
Yes. U.S. rules often treat UK pensions differently than HMRC, so reporting is required.
Q5: Can I do this myself, or should I hire help?
It depends on your situation. If you have simple income and no foreign assets, DIY might work. But most expats in London benefit from professional guidance.
Conclusion
Living in London as a U.S. expat can be one of the most rewarding life experiences, blending cultural richness with professional opportunity. But while the lifestyle may be simpler, filing US taxes in London is not.
With dual systems, strict reporting, and the IRS always watching, staying compliant requires preparation, awareness, and often expert support. Handle your taxes right, and you’ll be free to enjoy the best of both worlds—London’s global charm and peace of mind knowing you’re IRS-compliant.
