US residency starts on one identifiable date, and the US gives no step-up on arrival. The disposals, funds, trusts and company steps to take before you fly.
A British person moving to the United States has one closing window for planning, and it shuts on a specific, identifiable date. US tax residency begins either on the first day you are physically present in the calendar year in which you meet the substantial presence test, or on the first day of that year you are present as a lawful permanent resident — and from that date the US taxes your worldwide income and gains, without rebasing your assets to what they were worth on arrival. Almost nothing below can be fixed after that date.
Two tests do the work; meeting either makes you a US resident for the calendar year.
A lawful permanent resident at any point in the calendar year is a US tax resident for that year, and the IRS says "your residency starting date is the first day in the calendar year on which you are present in the United States" as a lawful permanent resident.
The substantial presence test has two limbs. You must be present on at least "31 days during the current year", and you must reach "183 days during the 3-year period that includes the current year and the 2 years immediately before that". The three-year total is weighted: current-year days count in full, plus "1/3 of the days you were present in the first year before the current year" and "1/6 of the days you were present in the second year before the current year".
The weighting catches people who thought they were counting correctly. Someone in the US 150 days a year for three running years reaches 150 + 50 + 25 = 225 weighted days and is resident. At 120 days a year the total is 180 and they are not — hence the informal 120-day ceiling, and a fragile one: one busy year breaks it.
There is a release valve. Under the closer connection exception you can still be treated as a nonresident if you were present fewer than 183 days in the current year, "maintain a tax home in a foreign country during the year" and have a closer connection to it. It is not automatic — Publication 519 requires a completed Form 8840 attached to a timely return, and warns that "if you do not timely file Form 8840, you cannot claim a closer connection to a foreign country or countries".
Treat the date as a planning output, not an accident of flight bookings. Publication 519 offers one narrow softener: in fixing the residency starting date "you do not have to count up to 10 days of actual presence in the United States" where you had a tax home abroad and a closer connection to that country on those days — though those days still count when applying the test. Otherwise a February house-hunting trip followed by a September move pulls the start date back to February.
The first-year choice lets someone who does not yet meet the substantial presence test elect into residency early, on being present "at least 31 days in a row in the current year" and then for "at least 75% of the number of days beginning with the first day" of that period. For an arrival whose pre-immigration work is unfinished, electing residency earlier is the opposite of what you want — as are the elections that let you and a non-resident spouse file jointly as full-year residents.
Some countries treat an arriving resident as acquiring their assets at market value on arrival. The United States does not. No provision of the Internal Revenue Code rebases an immigrant's assets; basis remains historic cost, and the main general step-up in US law happens at death, not at the airport.
Buy a holding in 2009 for £200,000, land in Boston when it is worth £2m, and the whole £1.8m of pre-arrival growth sits inside your US basis — taxable on a 2030 sale, though every pound of it accrued while you were UK-resident.
Before your residency starting date the position is very different: a nonresident alien is generally outside the US net on capital gains, the main exceptions being US real property interests and the 30% charge in IRC §871(a)(2) on US-source gains of someone present "183 days or more during the taxable year".
So the classic pre-immigration step is to crystallise the gain while the US cannot reach it: sell before the residency starting date, then reacquire, so your US basis is the fresh market price rather than a decade-old cost. The US wash sale rule disallows losses on repurchase, not gains — but a sale that is not a genuine disposal achieves nothing.
None of this is free, because the disposal is a UK disposal while you are still UK-resident. Capital gains tax runs at 18% or 24% depending on your taxable income, against an annual exempt amount of £3,000 for 2026 to 2027. So the decision is a comparison: a known UK cost today against a contingent US cost later, at federal long-term rates plus the net investment income tax plus state tax. It turns on how long you will really hold the asset, whether a relief such as Business Asset Disposal Relief applies, the landing state, and whether you expect to come back.
That last point has its own trap. Under TCGA 1992 s.1M, gains realised by someone "temporarily non-resident" are treated as accruing in the period of return — broadly, where there was sole UK residence in "at least 4 out of the 7 tax years immediately preceding the year of departure" and a "temporary period of non-residence" of "5 years or less" (FA 2013, Sch 45, para 110). A founder who moves to Austin for three years, sells in year two and comes home can find the UK charging the gain on return.
GOV.UK confirms that when you stop being a UK resident "you can keep your ISA open" and "you'll still get UK tax relief on money and investments held in it", but "you cannot put money into it", and you "must tell your ISA provider as soon as you stop being a UK resident". Nothing in US law mirrors the wrapper: once you are a US resident, the interest, dividends and realised gains inside an ISA are ordinary reportable items on your Form 1040.
What it holds is usually worse. A UK OEIC, unit trust or investment trust will typically be a passive foreign investment company under IRC §1297, which catches a foreign corporation where "75 percent or more of the gross income ... is passive income" or at least half its average assets are held to produce passive income. Under the default regime in §1291, an excess distribution or disposal gain is "allocated ratably to each day in the taxpayer's holding period", with amounts allocated to earlier years taxed at the top rate and carrying an interest charge — plus an annual Form 8621 for each fund.
So the practical move is to exit UK collective funds before the residency starting date and rebuild in US-domiciled funds and ETFs afterwards. Most UK retail funds do not produce the annual information statement a qualified electing fund election needs, so the softening elections are often unavailable. Our guide to PFIC rules for US investors abroad covers the mechanics.
UK pensions are the exception to the "simplify before you fly" instinct: do not cash in or restructure a SIPP or occupational scheme on the way out. The US treatment of a UK pension commencement lump sum is contested rather than settled, and assuming it is tax-free on both sides is expensive.
If you have settled a UK or offshore trust, the timing rule in IRC §679(a)(4) is the one to know. Where a nonresident alien's residency starting date falls "within 5 years after directly or indirectly transferring property to a foreign trust", the individual is treated as making that transfer on the residency starting date. The effect is grantor trust status: the trust's income becomes yours, with Form 3520-A for the trust and Form 3520 for you, and "undistributed net income for periods before such individual's residency starting date shall be taken into account". Becoming a beneficiary rather than a grantor is less drastic but still heavy: distributions from a foreign non-grantor trust go on Part III of Form 3520, and accumulated income distributions carry a punitive throwback computation.
The penalties are why this cannot wait for the first filing season. Under IRC §6677, a failure attracts "the greater of $10,000 or 35 percent of the gross reportable amount", reduced to 5% for the trust-level return, with a further "$10,000 for each 30-day period (or fraction thereof)" once the IRS has given notice. Reasonable cause is a defence; a foreign secrecy law is expressly not. We cover the filings in our guide to foreign trusts and Form 3520.
Under IRC §957(a) a foreign corporation is a controlled foreign corporation where more than 50% of its voting power or value is owned by US shareholders — a US shareholder being a US person holding 10% or more. A founder with a UK trading company is normally over both lines on day one.
The move is itself the filing trigger. The Form 5471 instructions list, as a Category 3 filer, "a person who becomes a U.S. person while meeting the 10% stock ownership requirement with respect to the foreign corporation". Failure to file carries "$10,000 ... for each annual accounting period of each foreign corporation", plus continuation penalties capped at "$50,000 for each failure".
Then the income regimes bite. Subpart F pulls certain passive and related-party income into your return whether or not anything is distributed, and the minimum-tax style regime in §951A — renamed and recalibrated for tax years beginning after 31 December 2025 — sweeps up much of the rest. For an individual, no corporate-level deduction or deemed-paid foreign tax credit is available unless an election under IRC §962(a) is made, treating the amounts "as if they were received by a domestic corporation". The rate mechanics changed for 2026, so confirm the current figures before modelling.
Pre-arrival levers include clearing retained profits by dividend while you are still outside the US net, reviewing whether the shares should be held personally, and checking entity classification.
Two separate reporting regimes begin in your first US year.
Closing a dormant UK account in December does not remove the reporting year: both tests look at the peak. Consolidate accounts and gather highest-balance data before you go.
US estate and gift tax does not follow income tax residence. It follows domicile, and Treasury Regulation §20.0-1(b) sets a low bar: "a person acquires a domicile in a place by living there, for even a brief period of time" with "no definite present intention of later removing therefrom", though "residence without the requisite intention to remain indefinitely will not suffice". Someone arriving on a green card with their family and a house generally has a US domicile from the start.
A non-domiciled, non-citizen decedent's estate files Form 706-NA where US-situated assets exceed $60,000. A US-domiciled individual is instead within the worldwide estate tax net, against a basic exclusion amount set by IRC §2010(c)(3)(A) at "$15,000,000", inflation-adjusted "in the case of any decedent dying in a calendar year after 2026".
Some practical points. The 2026 annual gift tax exclusion is $19,000 (IRS) per recipient. The unlimited marital deduction is unavailable for transfers to a non-citizen spouse unless a qualified domestic trust is used. And the US and UK have a death tax convention in force, listed among the estate and gift tax treaties. Pre-arrival gifting, while you are outside the US gift tax net on non-US assets, is the standard planning window — though UK inheritance tax runs in parallel. A green card held in 8 of the last 15 tax years also makes you a long-term resident, bringing the expatriation tax regime into play if you later give it up.
States set their own residency rules, which need not match the federal residency starting date and are generally unaffected by the US-UK treaty. A handful impose no broad personal income tax; others tax residents on worldwide income with no equivalent of the federal foreign-income reliefs, and some — California and New York most prominently — pair a domicile test with a statutory day-count test and examine arrivals closely. So the landing state can move the all-in rate on a post-arrival disposal by several percentage points, feeding back into the sell-or-hold decision above. State rules vary and change often: confirm the position with the state's revenue department before you sign a lease.
1. 12 to 9 months — fix the date, on advice, and work backwards, counting every existing US day for the current and two preceding years.
2. 9 months — build the inventory: every holding with acquisition date and cost; every account; every pension; every trust in which you are settlor, beneficiary or protector; every shareholding.
3. 9 to 6 months — choose the landing state and model the all-in rate on the disposals you are contemplating.
4. 6 months — decide the sell-and-reacquire list, modelling UK capital gains tax now against projected US tax later.
5. 6 months — deal with funds and wrappers. Exit UK collective funds, decide what happens to ISAs, leave pensions alone until reviewed.
6. 6 to 4 months — review every trust against the five-year look-back and document settlor and beneficiary positions.
7. 4 months — review the company: shareholdings, retained profits, dividend timing, entity classification, and who will prepare the Form 5471.
8. 3 months — accounts and records. Consolidate and capture highest-balance data for next year's FBAR and 8938.
9. 2 months — estate and gift planning, including pre-arrival gifting and wills needing rewriting on both sides.
10. 1 month — execute the disposals, with a clean documentary trail, and do not let a late trip pull your start date backwards. Then file the arrival year deliberately: it is a dual-status year, and its elections should be chosen on purpose.
The mirror image of this exercise — a US person moving the other way — is in our guide to pre-arrival tax planning for moving to the UK.
We model the arrival date itself, run the UK and US consequences of each pre-arrival step side by side, and produce a dated sequence you can execute. Every US position is reviewed and signed off by a licensed IRS Enrolled Agent who is also ACCA-qualified on the UK side. The time to talk is while the date is still movable: our US-UK tax specialists can map the sequence against your holdings — book a consultation.
General information on the tax treatment of a UK-to-US move, current at the date of publication. It is not immigration advice, not investment advice, and not a substitute for advice on your own facts. Rates, thresholds and deadlines change in both countries, so confirm the current position before relying on any figure. The timing strategies described only work if executed before US residency begins, and need professional review against your own circumstances and intended state of residence.