Family wealth that crosses a border needs translating, not just reporting.
Gifts between spouses, help onto the housing ladder, an inheritance from abroad, a trust set up by grandparents — ordinary family events, each read completely differently by the two systems.
Gifts are free in one direction only
The UK barely taxes lifetime gifts; the US tracks them against a lifetime exemption — and gifts to a non-citizen spouse lose the unlimited marital deduction. A large inheritance from a non-US person is tax-free but still reportable on Form 3520, with penalties for silence.
- Gift planning across both regimes
- Form 3520 for foreign gifts and inheritances
- Non-citizen spouse transfers, structured properly
- 529s, JISAs and children's accounts across borders
Trusts multiply the paperwork
A perfectly sensible UK family trust becomes a foreign trust the moment it touches a US person, triggering annual 3520/3520-A filings and throwback rules on distributions. We report what exists and restructure what should never have been built that way.
What we typically handle for you
- Cross-border gift planning and reporting
- Form 3520 for foreign gifts and inheritances
- Trust mapping and 3520-A where triggered
- Non-citizen spouse transfer structuring
- Children's accounts: 529s, JISAs, custodial
- Education funding across both systems
- Estate planning against both thresholds
- Coordination with your solicitors
The services that usually apply
Questions we get about this
If they are a US citizen and their income crosses the threshold, yes - including unearned income from savings or investments held in their name.
Custodial accounts and Junior ISAs frequently generate exactly this without anyone intending it.
The UK tax relief is real but meaningless to the IRS, and the funds inside are usually PFICs with heavy reporting.
Many families conclude the reporting outweighs the benefit and save for the child a different way.
They may well be a US citizen automatically, depending on the parent's own history of US residence.
Establishing this early is far easier than discovering it when they turn eighteen with years of unfiled returns.
If they are US citizens, potentially yes, once their income crosses the relevant thresholds - including unearned income from savings or investments held for them.
Children born abroad to a US parent are frequently US citizens without the family having thought of it in tax terms.
Receiving it is generally not taxable to you, but large foreign gifts and inheritances carry a reporting requirement.
The penalties for missing that report are meaningful even though no tax is due, which makes it an easy and costly thing to overlook.
They can be. Foreign trust reporting for US persons is heavy, and tax-advantaged UK savings wrappers give no US benefit while often holding PFICs.
Structures set up entirely sensibly under UK rules can read very differently to the IRS.
Related pages
- Who we help
Businesses expanding abroad
US and UK businesses expanding across the Atlantic: entity choice, permanent establishment, transfer pricing and payroll.
- Pillar guide
Tax specialists for US and UK
What US and UK tax specialists handle that a general accountant does not: residence tests, treaty relief, FBAR, PFICs, pensions, property and catch-up filings.
- Service
Trusts & estates
Cross-border trusts, gifts and inheritance: US-UK estate planning, foreign trust reporting and the forms that catch families out.
- Service
IRS Form 3520
Form 3520 explained: reporting foreign gifts and inheritances over $100,000, foreign trust transactions, Form 3520-A, and the 25% penalty for missing it.
- Who we help
Retirees & pensioners
Retiring across the Atlantic: pensions drawn cross-border, Social Security, state pension and lump sums under the treaty.
- Glossary
FBAR: definition
The Foreign Bank Account Report — FinCEN Form 114 — and its $10,000 aggregate trigger.
Further reading
- The trustees called it a loan. The IRS calls it a distribution.
British families use trusts routinely and sensibly. An American beneficiary turns that ordinary arrangement into one of the heaviest reporting burdens in the code.
- Capital losses do not cross the Atlantic
A loss is a loss in both countries, but almost nothing else about it matches. The relief differs, the carry rules differ, and one of them expires if you say nothing.
- Paying school fees across an ocean, and who gets taxed on it
Grandparents helping with fees is generous and ordinary. Doing it across a border turns it into a gift question, a reporting question, and occasionally a tax bill.
Last reviewed . Thresholds and rates change annually — check figures against the current tax year before relying on them.
Family with US connections?
Children, gifts and trusts all carry their own reporting. We will map what applies to yours.