Keeping UK Assets After Moving to the USA: Capital Gains Tax, Inheritance Tax and the FIG Rules Explained Simply

Most dual citizens who move back to the United States do not sell everything first. They keep the flat, the pension, an investment account and perhaps a share of a family property. That is perfectly sensible — but each of those assets keeps a thread attached to HMRC, and the threads are cut at different times. This article explains, in plain English, what happens to capital gains tax, inheritance tax and the new FIG regime when you leave.

1. Capital gains tax after you leave

Once you are non-resident, the UK generally stops taxing your gains — with one big exception. Since April 2015 (and extended in April 2019 to all UK land and commercial property, and to shares in property-rich companies), non-residents remain within UK CGT on disposals of UK land and property.

Two hard rules go with that:

• You must file a UK property disposal return within 60 days of completion, and pay any tax due in the same window. This applies even if there is no tax to pay in some cases, and even if you also report the sale on your annual return.
• You may rebase to the property's market value at April 2015 (residential) or April 2019 (non-residential), which often reduces the gain substantially.

Example. Sarah bought her Clapham flat in 2009 for £310,000. It was worth £520,000 in April 2015 and she sells it in 2029 for £640,000 while living in Boston. Using April 2015 rebasing, her chargeable gain is broadly £120,000, not £330,000. She reports it within 60 days, claims any private residence relief for the period she lived there, and takes a US foreign tax credit for the UK tax on her Form 1040.

The temporary non-residence trap

This is the rule that makes "at least five years" the standard advice. If you are non-resident for five years or fewer and then return to the UK, gains you realised while away on assets you owned before you left can be dragged back into UK tax in the year you return. The same principle catches certain income, such as large closely-held company dividends.

Practically: if you sell your UK share portfolio the year after you land in Chicago and then move back to London after four years, HMRC can tax that gain on your return. Stay away for more than five complete tax years and that risk falls away. This is a rule about years of non-residence, not about how many days you visit — the day counts in the first article in this series are what keep each of those years non-resident.

2. Inheritance tax: the long-term residence test

From 6 April 2025 the UK abolished domicile as the connecting factor for inheritance tax and replaced it with a residence test. In outline:

• You are a long-term resident if you were UK resident for at least 10 of the previous 20 tax years. Long-term residents are within UK IHT on their worldwide estate.
• Everyone else is within UK IHT only on UK-situated assets — most importantly UK real estate, which is always in scope whoever owns it and wherever they live.
• When you leave, a tail applies. Broadly, if you were UK resident for 10–13 of the previous 20 years the tail is three years, extending by one year for each additional year of residence up to a maximum of ten years. During the tail your worldwide estate stays in the UK IHT net.

Example. Sarah was UK resident for 14 tax years before leaving. Her tail is roughly seven years. If she died in year three in Boston, her worldwide estate — the US house, the 401(k), everything — would be within UK IHT at 40% above the nil-rate bands, with credit for US estate tax under the US/UK estate tax treaty. If she dies in year eight, only her UK assets (the Clapham flat, while she still owns it) are in scope.

Two more points that matter for Americans:

• UK residential property is never out of scope. Keep the flat and it stays exposed to UK IHT indefinitely, even decades after you leave.
• Spouse transfers differ. The UK gives an unlimited spouse exemption between spouses in the same position; the US gives an unlimited marital deduction only where the surviving spouse is a US citizen, otherwise a QDOT is needed. Mixed-nationality couples need the two systems reviewed together.

3. Where the FIG regime fits — and where it does not

The Foreign Income and Gains (FIG) regime, in force from 6 April 2025, replaced the remittance basis. It gives people who become UK resident after ten consecutive tax years of non-residence a four-year window in which their foreign income and gains are effectively free of UK tax, whether or not they bring the money to the UK.

Two things follow for a departing dual citizen:

• FIG is not relevant to you while you are non-resident. It is an arrival relief, not a departure one.
• It becomes very relevant if you ever come back. Ten complete tax years away, and a future return to the UK could come with four years of clean foreign income and gains treatment — a genuinely large number for someone with US investments. Five years away protects you from temporary non-residence; ten years away buys you FIG on the way back.

4. Pensions, ISAs and investment accounts

• ISAs stop being tax-free the moment you become non-resident for contribution purposes, and the US never recognised the wrapper anyway — the IRS taxes the underlying income and gains throughout.
• UK pensions are generally taxable only in the country of residence under the US/UK treaty, with the 25% UK tax-free lump sum being a well-known problem area on the US side. Take advice before drawing anything.
• UK funds and investment trusts are usually PFICs for US purposes, with punitive tax and Form 8621 reporting. Most returning clients restructure these before or shortly after the move.

A simple timeline to hold in your head

1. Year of departure — claim split-year treatment on SA109; register under the Non-resident Landlord Scheme; consider realising or restructuring PFICs.
2. Years 1 to 5 — keep each tax year non-resident within your tie-based day limit; avoid large disposals of pre-departure assets while temporary non-residence can bite.
3. Years 3 to 10 — the IHT tail runs off, depending on how long you were resident.
4. After 5 years — temporary non-residence risk is gone.
5. After 10 years — a future return to the UK could qualify for the four-year FIG regime.

None of this is automatic. Each stage depends on the day counts, on which assets you keep, and on filing the right forms on both sides in the right order. We prepare US and UK returns together for dual citizens and produce a written plan covering the whole timeline above.

A 30-minute consultation is £150. If you instruct us, we confirm a fixed fee in writing after reviewing your documents.