Split-year treatment, temporary non-residence, ISAs, SIPPs and the UK house — plus the US side: the FEIE ending, state residency restarting, credits expiring.
Moving home to the United States after years in the UK gives you one tax year in which both systems have a claim on you, and the order of events inside that year decides who taxes what. The UK side turns on split-year treatment, a final Self Assessment and the temporary non-residence rules; the US side turns on the end of the Foreign Earned Income Exclusion, a fresh state residency clock and foreign tax credits you may never get to use. Most of the expensive mistakes in a repatriation are made in the three months before the flight, not on the return afterwards.
The UK and US tax years do not begin or end on the same day, which is why repatriation is not the outbound move in reverse. A gain realised around your flight can fall into a UK year in which you were still resident and a US year in which you no longer qualify for any exclusion. Fix the dates first and the transactions second; our note on the moving year US-UK tax return covers the split year itself.
UK residence is decided by the statutory residence test, one of whose automatic tests is that you spent 183 or more days in the UK in the tax year. Where you move part-way through a year, HMRC explains that the tax year is usually split into two — a non-resident part and a resident part — so you only pay UK tax on foreign income for the time you were living in the UK. It is not automatic: HMRC notes you will not get split-year treatment if you lived abroad for less than a full tax year before returning.
Two administrative steps follow.
The standing Self Assessment deadlines still apply — tell HMRC by 5 October following the tax year if you need to file, paper returns by 31 October, online returns and payment by 31 January.
This one surprises people because it only bites once you are back. HMRC's helpsheet on temporary non-residents and Capital Gains Tax sets out the conditions: you had sole UK residence for the whole or part of at least 4 out of the 7 tax years preceding the year of departure; you then had a residence period that was not sole UK residence between two periods of sole UK residence; and the total of those non-sole-UK-residence periods did not exceed 5 years.
Where it applies, certain gains and losses arising during that period are treated as arising in the year of return — taxed, and allowable, in that year rather than sitting outside the UK net. Gains on assets acquired after you left are generally excluded, subject to exceptions for no-gain/no-loss transfers, rollover relief and previously deferred gains.
The obvious objection is that none of this applies if you are leaving for good — but plans change, and if there is any realistic prospect of returning, a large gain crystallised while you are away is a contingent UK liability rather than a closed matter.
The rules reach beyond gains to distributions from closely controlled companies, which HMRC says are charged to UK tax as if the individual received them in the period of their return where the individual was a material participator, or an associate of one, within the year of departure or the three preceding years. Owner-managers are caught here: leaving and then clearing a reserve by dividend is not, in itself, a UK-clean transaction.
The rules changed from April 2026. A government measure removes the concept of "post departure trade profits" from the temporary non-residence rules and ensures all distributions or dividends received from a close company while temporarily non-resident will be chargeable to UK income tax. It has effect for individuals returning to the UK on and after 6 April 2026, with new provisions relieving double taxation where foreign tax was suffered on the distribution and relief is not otherwise available. Any exit plan built on the old carve-out needs revisiting.
ISAs. HMRC states that if you open an ISA in the UK, then move abroad and become non-UK resident, you cannot put money into it — other than Crown employees working overseas and their spouses or civil partners. You must tell your provider when you stop being resident, existing savings keep their UK treatment, and you can pay in again if you return and become UK resident. For an American the wrapper was never doing the work it does for a British saver: the UK exemption is not recognised by the US, and the funds commonly held inside one create US reporting complications of their own, as our comparison of ISAs and Roth IRAs for US persons in the UK sets out. The live question is whether any restructuring is better done before or after the move.
Pensions. A SIPP or workplace pension left behind is usually the easier decision: you are not obliged to move it, and transferring a UK pension in a hurry is one of the few irreversible steps in a repatriation. What needs attention is how contributions stop, how the scheme is reported on your US return each year, and how future drawdown is treated under the US-UK treaty. The United Kingdom does appear on the IRS list of income tax treaties in force — which is why the position is workable, and why it should be documented rather than assumed. We cover it in US tax on UK pensions and SIPPs.
If you sell the house, the timing of exchange and completion against your residence dates is the whole question. HMRC states that you always get relief for the last 9 months before you sold your home, and that for a single-home owner there is relief for any period you were working outside the UK, up to 4 years where you had to live away from home in the UK for work, and up to 3 years of absence for any reason. These reliefs are conditional and they interact. If you are already non-resident when you sell, HMRC requires you to report the disposal within 60 days of completion, even where you have no tax to pay or made a loss.
On the US side, the IRS allows you to exclude up to $250,000 of that gain, or up to $500,000 on a joint return, where you owned the home for at least 24 months out of the 5 years leading up to the sale, used it as a residence for at least 24 months of those 5 years, and did not exclude gain on another home in the two years before the sale. That clock runs backwards from the sale date, so a home you lived in until the month you left may still qualify while one you let for years afterwards may not — and the US measures the gain in dollars, so a sterling break-even can be a dollar gain.
The Foreign Earned Income Exclusion requires a foreign tax home plus either bona fide residence in a foreign country for an uninterrupted period that includes an entire tax year, or physical presence in a foreign country for at least 330 full days during any period of 12 consecutive months. Once you land for good, both close. Where your qualifying period covers only part of the year, the IRS prorates: multiply the maximum exclusion amount for the year by your qualifying days and divide by 365, or 366 in a leap year. The maximum is adjusted annually for inflation — for tax year 2025 the IRS set it at the lesser of foreign income earned or $130,000 per qualifying person — so use the figure for the year of your move.
Two consequences follow. Income earned after your qualifying period ends is fully in the US net, which makes a final UK bonus, share vest or completion payment acutely date-sensitive. And the state comes back: state residency is a separate question from your federal position, states apply their own domicile and statutory residence tests, and several are known for pursuing former residents who never clearly severed their ties. If you kept a house, a driving licence or voter registration while abroad, the return is the moment to tidy that record. Our residency page is the place to start.
Years of UK tax typically generate excess foreign tax credits, and they are not permanent. The IRS states that you can carry back for one year and then carry forward for 10 years the unused foreign tax, and that the credit is the smaller of the foreign tax paid or accrued and the US tax attributable to your foreign source income.
Once you are home and earning US-source income, there may be no foreign source income left for those carryovers to absorb, and a balance built over a decade can expire unused. Review the position before the move, while foreign source income can still realistically be recognised — not three years later, when the credits are stranded. Mechanics in foreign tax credit carryovers for US expats.
A repatriation is a sequencing exercise before it is a filing exercise. We map the UK exit and the US arrival on one timeline, test the temporary non-residence exposure, identify the transactions that belong on one side of the move rather than the other, and prepare both countries' filings so they agree. The useful conversation happens before the flight, not after.
Every US filing that leaves the firm is reviewed and signed off by a licensed CPA or Enrolled Agent, and the UK side is reviewed by an ACCA-qualified accountant. See how we work with US-UK clients, or book a confidential consultation.
This article is general information, not tax or legal advice, and does not create a professional relationship. UK and US rules, limits and reliefs change, and the treatment of your residence, income, gains and accounts depends on your own facts; confirm the current position with a licensed professional before acting.
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Reviewed by a CPA / Enrolled Agent. Last updated: 16 September 2026.
Official sources: GOV.UK — Tax on foreign income: UK residence and tax | GOV.UK — Tax if you leave the UK to live abroad | GOV.UK — Get your Income Tax right if you're leaving the UK (P85) | GOV.UK — HS278 Temporary non-residents and Capital Gains Tax (2026) | HMRC — RFIG21600: temporary non-residence, distributions from closely controlled companies | GOV.UK — Temporary non-residence rules: post departure trade profits | GOV.UK — ISAs if you move abroad | GOV.UK — Private Residence Relief: absence from home | GOV.UK — Capital Gains Tax for non-residents: UK residential property | GOV.UK — Self Assessment deadlines | IRS — Foreign earned income exclusion | IRS — Figuring the foreign earned income exclusion | IRS — Topic no. 856, Foreign tax credit | IRS — Topic no. 701, Sale of your home | IRS — Report of Foreign Bank and Financial Accounts (FBAR) | IRS — United States income tax treaties A to Z