US-UK dual citizen tax guide: Everything you need to know
US-UK dual citizens are required to file a US tax return every year, reporting worldwide income to the IRS – regardless of where they live. The UK, on the other hand, taxes based on residence. However, the US-UK tax treaty, along with provisions like Foreign Earned Income Exclusion (FEIE) and Foreign Tax Credit (FTC) ensure that most dual citizens do not end up paying full tax twice on the same income.
This 2026 guide covers whether the US and UK permit dual citizenship, how to obtain it through naturalization or birth, tax filing obligations in both countries, how to avoid double taxation using FEIE and FTC, and answers common questions about US-UK dual citizenship.
Do the United States and the United Kingdom allow dual citizenship?
Yes, both the United States and the United Kingdom permit dual citizenship. Neither country requires you to renounce your original citizenship when naturalizing in the other. US citizens can become British citizens, and British citizens can become US citizens, while maintaining both nationalities without legal penalty.
Does the US allow dual citizenship?
The United States has no law prohibiting dual citizenship. The State Department recognizes that dual nationality exists as a matter of fact when a person is a national of two countries simultaneously. US citizens who naturalize in the UK automatically retain US citizenship.
That said, dual citizens must comply with US obligations, including filing annual tax returns with the IRS, regardless of where they live in the world.
Does the UK allow dual citizenship?
The United Kingdom explicitly allows dual citizenship under the British Nationality Act 1981. British citizens can hold other citizenships without penalty or restriction, and the UK does not require foreign nationals to renounce their original citizenship when applying for British naturalization.
Since 1949, Commonwealth and foreign nationals have been able to retain their original citizenship upon becoming British citizens.
Practical considerations
Filing US tax returns annually is mandatory for US-UK dual citizens due to citizenship-based taxation, and UK Self Assessment applies if you meet UK residency requirements. On the plus side, you can live and work freely in both countries, hold two passports, vote in both elections, and own property without restrictions.
How to obtain US-UK dual citizenship
US-UK dual citizenship can be obtained through birth (born in either country or to a citizen parent), naturalization (living in one country while a citizen of the other), or descent (via parents or grandparents). Naturalization requires residency, language proficiency, a knowledge test, and typically five to six years before eligibility.
US citizenship requirements for UK nationals
After five years as a lawful permanent resident (three if married to a US citizen), you'll need 30+ months of physical presence, pass the US civics and English tests, and take the Oath of Allegiance. Processing takes 6–12 months, and your UK citizenship is retained automatically.
UK citizenship requirements for US nationals
After five years of UK residence with Indefinite Leave to Remain – with no more than 450 days absent (90 in the final year) – you'll need to pass the Life in the UK test, demonstrate English at B1 level, and attend a citizenship ceremony. Your US citizenship is retained automatically.
Tax filing obligations for US-UK dual citizens
As a US-UK dual citizen, you'll likely need to file in both countries – but that doesn't mean you pay full taxes twice. US citizens report worldwide income to the IRS every year regardless of where they live, while the UK only taxes residents. Most dual citizens use tax credits to prevent double taxation.
US tax filing requirements
Every US citizen must file Form 1040 if income exceeds $14,600 (single) or $29,200 (married filing jointly) – no matter where they live or earn. Worldwide income is reportable, including UK wages, dividends, interest, and capital gains.
Additional tax obligations:
- FBAR (FinCEN Form 114): file if foreign bank accounts exceed $10,000 combined at any point during the year
- Form 8938 (FATCA): file if foreign financial assets exceed $200,000
Deadline: June 15 (automatic extension for expats), October 15 with Form 4868
UK tax requirements
UK tax residency is determined by the Statutory Residence Test – generally, 183+ days in the UK makes you a tax resident. File Self Assessment if any of the following apply:
- Self-employed with income over £1,000
- Total income over £150,000
- Untaxed income over £2,500
- Foreign income over £2,000
- Capital gains exceeding £3,000 (2025–2026 exemption)
Employees paid through PAYE do notneed to file Self Assessment unless they have foreign income or other triggers. Online filing is due by January 31, paper by October 31.
How to avoid double taxation: FEIE and FTC
The two main tools for preventing double taxation are the Foreign Earned Income Exclusion (FEIE) – which excludes up to $130,000 of foreign wages from US tax altogether, and the Foreign Tax Credit (FTC), which credits UK taxes paid dollar-for-dollar against your US tax liability. Many dual citizens strategically combine both.
Foreign Earned Income Exclusion – Form 2555
FEIE lets you exclude up to $130,000 (2025, filed in 2026) of foreign earned income from US taxation. It applies to wages and self-employment income only – not passive income.
To qualify, you need to meet one of the following:
- Physical Presence Test – 330 days outside the US in 12 months
- Bona Fide Residence Test – full UK tax year as a resident
File Form 2555 alongside Form 1040.
Best for: income under $130,000 and straightforward employment situations.
Foreign Tax Credit – Form 1116
FTC credits your US tax dollar-for-dollar with UK taxes paid on the same income. The credit is limited to US tax on foreign income:
(Foreign Income ÷ Worldwide Income) × US Tax Liability = Maximum Credit
- File Form 1116 separately for passive and earned income
- Excess credits carry forward for 10 years
Best for: income over $130,000, passive income, or when the UK tax rate exceeds the US rate.
US vs UK tax filing comparison
| Aspect | United States | United Kingdom |
|---|---|---|
| Tax basis | Citizenship (all citizens worldwide) | Residence (UK residents only) |
| Filing required | Income $14,600+ (single), $29,200+ (married) | Variable: self-employed £1k+, income £150k+, foreign income £2k+ |
| Worldwide income | Always (all US citizens) | Only if a UK tax resident |
| Tax year | January 1 – December 31 | April 6 – April 5 |
| Filing deadline | June 15 (expats), October 15 (extended) | January 31 (online), October 31 (paper) |
| Main form | Form 1040 | SA100 Self Assessment |
| Withholding system | W-2 (employer withholds) | PAYE (employer withholds) |
| Foreign account reporting | FBAR ($10k+), Form 8938 ($200k+) | Automatic via FATCA exchange |
| Double tax relief | FEIE (Form 2555), FTC (Form 1116) | Foreign Tax Credit Relief |
Dual citizens must comply with both systems if income exceeds filing thresholds. Tax treaty provisions and credits prevent actual double taxation in most scenarios.
Conclusion
US-UK dual citizenship opens up significant opportunities for living and working in both countries. Getting your tax filing obligations, FEIE vs FTC strategy, and compliance requirements right ensures you make the most of both citizenships while avoiding penalties.
Here's a quick recap:
- Both countries permit dual citizenship – no renunciation required
- The US taxes all citizens worldwide – file Form 1040 annually regardless of residence
- The UK taxes residents on worldwide income – Self Assessment applies if thresholds are met
- Use FEIE (up to $130,000 exclusion) or FTC to avoid double taxation
- File a FBAR if foreign bank accounts exceed $10,000 combined
- Deadlines: UK January 31, US June 15 (expats) or October 15 (extended)
Taxes For Expats provides expert expat tax services for US-UK dual citizens. Our CPAs handle complex scenarios including FEIE and FTC optimization, FBAR compliance, and dual citizenship tax planning – with 10,000+ expat returns filed.
FAQ
Yes. Both countries permit dual citizenship and do not require you to renounce your original nationality. You can hold US and UK citizenship at the same time while complying with both countries’ laws, including annual US tax filing requirements.
Yes. The United States taxes based on citizenship, not residence. All US citizens must file a federal tax return if their income exceeds the filing threshold, even if they live permanently in the UK. You may use the Foreign Earned Income Exclusion (FEIE) or the Foreign Tax Credit (FTC) to reduce or eliminate US tax.
The UK taxes based on residence. If you are a UK tax resident under the Statutory Residence Test, you may need to file a Self Assessment tax return depending on your income level and sources of income. UK residents are generally taxed on worldwide income.
You may need to file tax returns in both countries if your income exceeds filing thresholds. However, most dual citizens do not pay full tax twice on the same income. The Foreign Earned Income Exclusion (FEIE), the Foreign Tax Credit (FTC), and the US-UK Tax Treaty help prevent double taxation.
The Foreign Earned Income Exclusion (FEIE) allows qualifying taxpayers to exclude up to $130,000 for the 2025 tax year (filed in 2026) of foreign earned income from US federal income tax. To claim it, you must file Form 2555 and meet either the Physical Presence Test or the Bona Fide Residence Test.
The Foreign Tax Credit (FTC) allows you to offset US income tax with foreign income taxes paid to the UK on the same income. It is claimed on Form 1116 and is limited to the portion of US tax attributable to foreign-source income. Excess credits may generally be carried forward up to 10 years.
The Foreign Earned Income Exclusion is often beneficial if your earned income is below the exclusion limit and you have limited passive income. The Foreign Tax Credit is typically more advantageous when UK tax rates exceed US rates or when you have income that does not qualify for the exclusion, such as dividends or capital gains. In some situations, both may be used.
The Report of Foreign Bank and Financial Accounts (FBAR), filed on FinCEN Form 114, is required if the combined balance of your non-US financial accounts exceeds $10,000 at any point during the year. This includes UK bank accounts, savings accounts, and certain investment accounts.
A: No. Naturalizing as a UK citizen does not automatically terminate US citizenship. You retain both citizenships unless you formally renounce US citizenship through the US Department of State. US tax filing obligations continue as long as you remain a US citizen.
Failure to file can result in penalties, interest, and additional reporting consequences, including penalties related to the FBAR. The IRS Streamlined Filing Compliance Procedures may be available for taxpayers who were non-willful in failing to meet their filing obligations.
The US-UK Tax Treaty allocates taxing rights between the two countries and provides tie-breaker rules for individuals who may be considered residents of both countries. It covers areas such as pensions, Social Security, dividends, and capital gains to help reduce double taxation.
Yes. Through the Foreign Tax Credit claimed on Form 1116, you may offset US income tax dollar-for-dollar with UK income taxes paid on the same income. You cannot claim the Foreign Tax Credit on income already excluded under the Foreign Earned Income Exclusion.
