Americans in the UK Brace for Rapid Shifts in UK and US Tax Rules

Oops, The Tax Landscape Has Changed—And Your Wallet is Watching

American expats in the UK, brace yourselves. Tax officials in both countries are shaking things up. The UK is ditching its beloved non‑dom regime (thanks, Rachel Reeves!) while the U.S. might scrap, extend, or fine‑tune its Estate Tax. So what does this mean for a U.S. citizen juggling life between the Emerald Isle and the Stars and Stripes?

Picture this: The Non‑Dom Revolution

Imagine you’re a U.S. citizen living in London, casually calling it home for a few years. Under the old UK rules, you could sneak through a loophole, keep most of your global cash in the U.K., and dodge hefty Inheritance Tax (IHT). But the new decree will remove that loophole by April 2025. Dropping out of the UK before you hit long‑term resident status means you’re back on the tax hook. Your UK‑based assets will be subject to IHT, but you can still possibly escape U.S. Estate Tax if you happen to get the extension—or better yet, if it disappears entirely.

The Estate Tax Shuffle

Current exemption is $13.6 million.
Due to expire December 2025.
Trump might keep it or lift it—who knows?

Because U.S. Estate and Gift Taxes hang out together, this rule change could make you consider making gifts now—before the exemption drops—and then re‑applying next year when things have settled. It’s the investment strategy equivalent of buying a fresh pot of coffee right before the espresso machine breaks.

What If you’re a Long‑Term Resident?

For those who meet the new UK definition of a long‑term resident, the timing becomes a bit of a headache. If you were already on the brink of being considered ‘deemed domicile,’ you may find yourself scrambling to adjust your tax plans because the budget has already ruled the era of old rules. The new mantra: IHT on worldwide assets is now the name of the game. Keep that in mind, because it will probably stick around for the foreseeable future—regardless of what happens to the U.S. Estate Tax.

So, what should you do?

Talk to a tax pro fast. Personal advice beats generic warnings.
If your spouse isn’t a U.S. citizen, double‑check how your assets will mingle under the two regimes.
Revisit your will. If you drafted it while still a U.S. citizen and never updated it, it’s probably not ready for the dual‑tax reality.

Bottom line: No one‑size‑fits‑all. The only constant is that your future estate plans will need a bit of extra love—and maybe a lawyer’s help—after the budget and the U.S. policy shifts. Stay on top of the changes before these two tax systems decide to stop playing nice. And if you’re in between, enjoy the feeling that tax laws can be as unpredictable as a British rainy day—but boy, it keeps you on your toes!