If you’re a British expat living in the US, the path to retirement is anything but simple.
The UK and US have conflicting pension rules, tax regimes, and reporting obligations. And the complications don’t stop there. Ensuring that you preserve your wealth for the next generation also requires you to navigate the complexities of UK Inheritance Tax (IHT) and US Estate Tax.
In short, there’s a great deal to consider.
This article highlights the key areas you’ll need to think about as you prepare to retire in the US.
For more detail on each aspect, download your complete guide “Retiring in the United States? What every British expat needs to know about retiring in the USA” today.
If you’d like to discuss your options with a financial planner, we’re here to help you get your retirement structure and strategy right – get in touch to arrange a no-obligation initial review today.
5 tips to help you manage cross-border assets
Organising all your assets now could pay off when you’re ready to start drawing an income. These five steps will help you get ahead of potential issues.
1. Know what assets you have and where they are held
As a British expat living in the US, you likely hold a mixture of assets. These may include:
• UK pension savings
• US retirement savings accounts
• UK bank accounts or Individual Savings Accounts (ISAs)
• Second homes, rental property, or inherited UK real estate
• Life cover or protection policies, taken out in the UK or US.
While this is all perfectly reasonable, the rules governing access, taxation, and inheritance are far from coordinated and can cause complications.
As a result, without a well-devised strategy, your patchwork of disconnected assets could lead you to pay more tax, receive unexpected penalties, or create unhelpful delays when you want to access your assets for income.
2. Understand US retirement account options
If you’ve been living in the US for several years, you may have one or several different US retirement accounts, including:
• Employer-sponsored retirement plans (401(k), 403(b), TSP, etc.)
• Traditional and Roth Individual Retirement Accounts
• US brokerage and taxable investment accounts
• US-based annuities or insurance-linked products.
So far, so good. But many Americans make missteps with tax planning, and as an expat, navigating the rules can be even more challenging.
From overpaying US tax due to poor timing to missing good opportunities to convert to a Roth, we often speak with clients who have no formal plans for when or how they’ll draw an income.
This can be costly.
Though many financial advisers and Certified Public Accountants (CPAs) don’t specialise in cross-border cases, this is something we take very seriously.
We’ll help map your income sources, anticipate tax cliffs, and position your assets so you don’t inadvertently find yourself in an unnecessarily high tax bracket.
3. Watch out for these common tax mistakes
Once you live in the US, your worldwide income is liable to tax.
From your US earnings and savings to your UK pensions, property, investments, and bank interest, it all comes into scope for US tax.
Plus, although the UK and US have a strong tax treaty, they don’t tax assets the same way or at the same time.
This can trip up even the most experienced expats, so be sure to take care not to fall foul of these five common mistakes:
• Not reporting UK pensions or ISA savings – failing to do so can trigger penalties.
• Taking retirement income without a sensible distribution strategy – the order, timing, and structure of income withdrawals can make or break your long-term plan.
• Selling a UK property or investments without planning the US tax impact – the IRS can tax growth if currency movements inflate the gain in US dollars, even if the property fell in value in pounds.
• Taking income from the wrong accounts first – this could push you into higher tax brackets, raise your Medicare premiums, or force you to forfeit tax-free growth opportunities.
• Using a tax adviser who doesn’t specialise in both systems – ideally you need an adviser who understands both sides.
This isn’t about avoiding tax; it’s about not paying it twice.
With the right approach and diligent timing, most tax exposures can be reduced or neutralised – but it must be planned in advance.
4. Structure your retirement income with care
Financial planning and expert advice are often associated with accumulating wealth. But seeking professional support is arguably even more important once you retire and begin drawing income from your assets.
It’s not a simple matter of spending from whichever account has the most cash. A coordinated drawdown plan should consider:
• Tax efficiency
• Currency exposure
• Benefit timing
• Legacy goals
• Required distributions
Without a coordinated plan, even the most affluent retirees can end up overpaying tax, running out of liquid funds, or missing key Roth conversion windows.
5. Plan ahead to preserve your wealth for the next generation
For cross-border families, estate planning is rarely straightforward.
Your assets may sit in two (or more) jurisdictions. Your beneficiaries may live in different tax systems, and what seems tax-efficient in one country may be exposed in another.
If you’re deemed UK-domiciled, IHT will apply to your worldwide estate. This may apply even if you’ve spent many years abroad.
Meanwhile, the US applies Estate Tax based on citizenship and residency, though it provides far higher exemptions than the UK allows.
Double taxation can occur unless structured correctly. Although the UK-US tax treaty could help to mitigate this, it will take careful planning.
We’re here to help bring it all together
At Alexander Peter, we work with British expatriates and dual citizens living in the US.
Download your complete guide: Retiring in the United States? What every British expat needs to know about retiring in the USA
If you’d prefer to discuss how we can help you, we’d be delighted to answer your questions.
Email enquiries@alexanderpeterusa.com or call +1 470 372 1550 to arrange a no-obligation initial review.
Please note
This article is for general information only and does not constitute advice. The information is aimed at retail clients only.
All information is correct at the time of writing and is subject to change in the future.
The Financial Conduct Authority does not regulate estate planning or tax planning.
A pension is a long-term investment not normally accessible until 55 (57 from April 2028). The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available. Past performance is not a reliable indicator of future performance.
The tax implications of pension withdrawals will be based on your individual circumstances. Thresholds, percentage rates, and tax legislation may change in subsequent Finance Acts.
The value of your investments (and any income from them) can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance.
Investments should be considered over the longer term and should fit in with your overall attitude to risk and financial circumstances.
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