Emigrating involved one set of unfamiliar forms. Moving back to America involves closing a British file, opening an American state file, and filing a federal return in a year when the reliefs you have leaned on for years stop applying.
That last point is the one that costs money rather than time.
In our practice the return year produces more corrections than any other, because people apply the previous year's assumptions to a year that no longer fits them. This is the checklist we work through.
What is different about the year you return?
Two systems both have a claim on part of it. Britain taxes up to your departure and any continuing UK sources afterwards. America taxes the whole calendar year, and a state may tax from the day you arrive.
Why does the exclusion usually fail?
Because both routes to it depend on time abroad, and you have just ended that. The physical presence test counts days outside the United States across a twelve-month period, and a return part way through the year breaks the count.
The bona fide residence test asks for a full tax year of residence abroad, which a mid-year return also disturbs.
So the relief that covered your salary for years may cover only part of this year, or none of it.
The foreign tax credit is unaffected, because it follows tax paid rather than days spent. Our comparison of the exclusion and the credit sets out the difference.
Should you revoke the exclusion election?
Rarely, and never casually. Revoking an election locks you out of the exclusion for five years unless the IRS consents otherwise, which is a long commitment made in a single filing season.
If you might work abroad again within that window, the lock matters.
Usually the better route is simply not qualifying this year while leaving the election intact.
That distinction is technical and worth getting right, because the consequences run for years.
| Item | British side | American side | Timing |
|---|---|---|---|
| Employment income to departure | Taxed to the departure date | Reported for the full year | Credit for UK tax paid |
| US employment after arrival | Outside UK charge if the year splits | Ordinary wages | Withholding resumes |
| Continuing UK rent | UK return each year | Reported annually | Credit on UK tax |
| UK bank accounts | No filing for the accounts themselves | FBAR for the year they existed | Even if closed on arrival |
| State residence | Not applicable | State return from arrival | Often no foreign tax credit |
| UK pension left behind | No UK charge until drawn | Treaty protects growth | Nothing due now |
Which state will tax you?
The one where you establish residence, and it will want a return for the part of the year you were there. States apply their own tests, usually built on domicile and ties rather than on a day count alone.
Crucially, many give no credit for foreign tax paid in the way the federal system does.
So income earned abroad but received after you arrive can face a state charge with no relief.
That single point is the most commonly missed item in a repatriation year.
What still has to be filed in Britain?
A final return in most cases, and annual returns afterwards where a UK source continues. GOV.UK's guidance on tax on UK income if you live abroad sets out what remains in charge.
A P85 is the alternative where you were only ever within PAYE, and HMRC's publication on getting your tax right when leaving explains it.
Either route may produce a refund, since a full year of allowances often sits against part of a year's pay.
Keep a UK bank account open long enough to receive it.
What happens to income that arrives after you land?
It is taxed by reference to where the work was done, not where you were standing when it paid out. A bonus for British work remains British in character even if it arrives in an American payroll month.
Britain may tax it and America certainly will, with the credit reconciling them.
Payroll on either side rarely reflects that automatically, so over-withholding is common.
Our article on bonuses and deferred pay works through the allocation.
Do you keep filing FBARs?
For any year in which the accounts existed, yes. Closing a UK account in March does not remove it from that year's reporting, because the test looks at the highest balance at any point.
Accounts you keep continue to count in later years.
So the year of return usually needs an FBAR, and the year after may not.
Our comparison of Form 8938 and the FBAR covers the thresholds for each.
What about the pension you leave behind?
Leave it where it is, in most cases. Treaty protection keeps growth inside a qualifying UK scheme out of current American tax, and that protection does not depend on you living in Britain.
Transferring it abroad introduces charges and conditions that rarely improve the position.
Drawing it early to simplify your affairs is usually the most expensive tidiness available.
Our article on UK pensions under US rules sets out the treatment in detail.
Should you make voluntary National Insurance contributions?
It depends how many qualifying years you already hold and what you expect from the UK state pension. GOV.UK's guidance on National Insurance if you work abroad explains when contributions can continue.
The sums involved are small relative to the eventual entitlement for many people.
Check your record before deciding, because the answer turns on your own history rather than on a general rule.
This is a decision with a long deadline, so it does not need making in the week you move.
What happens to ISAs and UK investments?
Subscriptions stop once you are non-resident, and the American position never recognised the wrapper anyway. So an ISA loses its remaining purpose on the British side while keeping its reporting cost on the American one.
Where it holds funds, those are passive foreign investment companies with their own regime.
Deciding before you move is easier than deciding afterwards, because selling while UK resident produces a creditable UK charge.
Our article on ISAs and the PFIC problem explains what you would otherwise carry home.
Do you need to start paying estimated tax?
Only if withholding will not cover your liability, which is common in a mixed year. A part-year of American employment plus foreign income and a credit calculation rarely produces neat withholding.
Underpayment charges apply even where the eventual return is correct, and the IRS sets out the quarterly dates.
So estimate the year in the month you arrive rather than in the following April.
Our article on estimated tax while living abroad covers the timetable and the safe harbours.
What does moving back do to your filing status?
It can change it, particularly where a spouse is not American. Married filing separately is the usual status alongside a non-US spouse, and returning to America does not alter that by itself.
What can change is the practical pressure to file jointly, since a joint return often produces a lower bill once you both live there.
That choice brings the spouse into the American system, which is a permanent decision rather than an annual one.
Our note on married filing separately with a UK spouse sets out the trade-off before you make it.
When is moving back the wrong time to sell?
In the weeks just after you arrive, usually. A gain realised once you are resident of a state can meet a state charge with no foreign tax credit behind it, whereas selling before departure keeps the gain inside the British system and at least generates something to credit.
Selling before departure keeps the gain inside the British system, which at least generates a credit.
So the sequencing matters even where the asset itself is straightforward.
Our article on selling a UK home as a US person works through the disposal side.
Moving back with children
Child-related credits change when the family returns, because several depend on residence and on a qualifying child having the right identification.
A child born in Britain to an American parent may need a Social Security number before certain credits can be claimed.
Start that paperwork before you fly if it is outstanding, since it is slower from abroad.
Our article on the child tax credit from abroad covers the conditions that apply while you are still away.
What records should you bring home?
More than you think you need, because retrieval becomes hard once you are no longer a UK resident with UK access. Take your P45 and P60s, payslips for the year, statements for every account as at your departure date, and your pension annual statements.
Add acquisition records for anything you still own, since those decide future gains.
Scan everything rather than shipping paper.
In our practice this folder is the difference between a straightforward return year and an archaeology project.
A note on timing the move itself
Where the date is flexible, moving back after a UK tax year ends is often tidier than moving mid-year. It gives Britain a clean final year and removes one split from the analysis.
The American year does not divide anyway, so nothing is lost on that side.
Arriving early in a calendar year also gives you more of a year in which to manage state residence and withholding.
None of that outweighs a job start date. It is simply worth knowing which way the tax leans if you have a choice.
Moving back, step by step
Work through this in the month before you fly if possible.
- Fix your departure and arrival dates, and identify which tax years they fall in.
- Decide what to sell, keep or leave behind before you go.
- File a P85 or plan a final UK return, depending on your position.
- Model the year with and without the exclusion, and leave any election intact unless advised otherwise.
- Identify the state you will be resident in and how it treats foreign income.
- Set up estimated payments if withholding will fall short.
- Collect the documents and note every account balance as at the date you leave.
An illustrative example
Take an illustrative return. An American leaves London in May after six years and starts work in Chicago in June, keeping a let flat in Britain.
Her UK position closes on the employment and continues on the rent. Her federal return covers the whole year, the exclusion fails on the day count, and the credit does the work instead.
Illinois then taxes her from June. The figures are illustrative; the state return is the item clients least expect.
Common mistakes we see
First, assuming the exclusion still applies in the year you are moving back. Second, revoking the election unnecessarily and locking out five years.
Third, forgetting the state entirely. Fourth, closing UK accounts before the HMRC refund arrives.
Fifth, skipping the FBAR because the accounts are now closed. Sixth, cashing a UK pension for the sake of simplicity.
Seventh, telling nobody. HMRC, your employer, your bank and your pension provider each need the new address, and post going to a flat you no longer occupy causes most of the follow-up work.
How US UK Tax Hub helps when you are moving back
We plan the year you are moving back as one exercise across three filings: the British closing position, the federal return and the state. Doing them together is what prevents the same income being taxed twice with no relief.
Our treaty relief service covers the credit position, and we handle the UK final return alongside it.
Tell us your arrival date and destination state and we will set out the filings in order.
