Are Americans starting to wake from the American Dream? Record numbers of Americans are crossing the pond and seeking to acquire British citizenship. While the re-election of Donald Trump is often cited as the chief impetus for US-UK moves, we are seeing that domestic politics is only one of many factors causing Americans to consider relocating to the UK, with tax, property and education coming to the forefront among a number of drivers. The UK has long held a special allure for Americans. Shared language, legal systems, and cultural familiarity make the transition smoother than most international moves. But in 2025, the reasons for relocation are more pragmatic than romantic.
Tax – The ‘FIG’ Regime as a Four Year Tax Break
The introduction of a new four-year Foreign Income and Gains (FIG) regime from 6 April 2025 (replacing the long-standing remittance basis of taxation for ‘non-doms’) has sparked interest among both high net worth Americans and British expats.
Under this regime, those who become UK tax resident for the first time (or those returning after 10 consecutive years of non-residence) can elect to pay no tax on foreign income and gains for their first four years of UK residency, even if those funds are brought into the UK at any time subsequently.
The option to sample four years in the UK (just long enough to ride out the Trump administration’s term in office) while taking advantage of this tax break is proving attractive as a financial planning option, particularly for those with an upcoming liquidity event, such as the sale of a business. The regime also affords such qualifying new residents an opportunity to restructure their affairs after they have arrived and tax neutrally from a UK perspective – something that was not usually possible under the remittance basis of taxation.
Those electing for this tax exemption should do so with caution, however, as full disclosure of all sources of worldwide income and gains must be disclosed to HMRC in order to claim the exemption – be prepared for preparing detailed self-assessment tax returns and the possibility of tax enquiries down the line, once the four-year window has expired.
Even after their qualifying four year regime has elapsed, because Americans are always taxed in the US on the basis of nationality but can claim double taxation relief under the UK/US treaty, an exposure to UK income tax and CGT on an arising basis is not as much of a deterrent for US citizens as it is for many other internationally mobile HNWIs.
Americans newly in the UK are not subject to UK inheritance tax for their first nine years of residence. This provides a helpful window to assess whether the UK is a good fit, without having to commit to being part of the UK inheritance tax net on a long-term basis at the outset.
Real Estate and Lifestyle Appeal
There has been an increase in the number of Americans purchasing prime central London property in recent years. While last year’s increase in the Stamp Duty Land Tax surcharge for additional properties (now up to 5%), added to the existing 2% surcharge for non-resident buyers has meant that buyers may be renting for an initial period, demand across the combined rental and purchase market from US clients has remained steady. The strong US dollar for much of this year has made prime UK property relatively affordable, with some central London homes priced as much as 22.4% lower than their 2014 peak[1].
Properties in Notting Hill, Kensington and Chelsea are particularly popular among US clients, with these areas seen as ‘safe bets’ in uncertain times and despite the general downturn in the property market.
Immigration Law Changes and New Visa Pathways
The highly skilled can look at Global Talent and High Potential Visas to come to the UK and the Global Talent category is particularly useful for US persons in tech and art industries.
For those who were disappointed by the removal of the UK’s investor visa (sometimes called a‘golden visa’) in 2022, the Government is developing a new investor visa, with a focus on investment in AI, clean energy and life sciences. This is expected some time in 2026 and will likely increase further American immigration to the UK.
A recent change in law, allowing some with UK-born grandmothers to apply for citizenship, has helped a wider pool of American citizens to obtain citizenship easily.
While the length of Graduate Visas (allowing international students to remain and look for work in the UK after completing a degree) has recently been shortened to 18 months, UK universities remain a strong source of immigration. Increasing US college fees, gun violence and the uncertainty caused by the President’s attacks on some Ivy League schools has only added to the ongoing appeal of studying in the UK for American students.
Have we woken from the American dream?
While headlines may focus on hasty moves based on political discontent, many Americans are making a strategic choice in relocating to the UK. We will discuss the trend towards transatlantic migration in a panel discussion Justin Webb (BBC, Americast), John Lahr (the New Yorker) and Janan Ganesh (the Financial Times) on the evening of 6 November – please email events@phb.co.uk to join us.
