As we approach the end of 2025, it’s essential to keep the US tax year end in mind, even while living in the UK. As ever there is the annual mismatch of year ends, as the US tax year ends on 31 December, whereas the UK tax year concludes on 5 April.
Here, we offer some considerations and reminders to discuss with your financial adviser before the end of the US tax year.
1.Review opportunities to adjust income and gains/losses
Effective tax planning involves avoiding sudden spikes in income and gains that could push you into a higher tax bracket. To achieve this, consider smoothing out taxable events across the years and at the end of each period consider whether to bring forward or defer the realisation of income or gains and move it into the most tax-efficient year.
During times of market uncertainty, it might be an opportune time to rebalance or exit certain assets, potentially reducing capital gains. Additionally, if you’ve already realised gains but hold unrealised losses, you might consider realising those losses now to offset taxable gains in the same year.
However, be mindful of currency exchange rates when assessing the impact on UK taxes.
2. Consider paying UK tax before 31 December
The US-UK tax treaty is designed to prevent double taxation, but the timing misalignment between tax rates and taxable periods offers potential cashflow issues or financial planning opportunities.
Despite the UK tax deadline being 31 January 2026, if you wish to use the UK payment as a credit against your US 2025 taxes, you should make the payment before 31 December 2025.
On the other hand, if you have accumulated excess foreign tax credits that might expire (they are valid for ten years), you could opt to delay your UK tax payment until after the year-end.
You should speak with your tax adviser to review your foreign tax credit position and consider aligning your UK tax payments for optimal results.
3. Explore gifting strategies
For 2025, the US estate tax exemption is $13.99m for single filers and $27.98m for married couples filing jointly. Under current legislation (following the One Big Beautiful Bill), the exemption is scheduled to increase to $15m per person ($30m per married couple) in 2026 and will continue to be indexed for inflation thereafter.
For those that also need to consider UK Inheritance Tax, this exemption is out of line with the standard £325,000 nil-rate band threshold. You may, therefore, need to start considering your estate planning and gifting earlier than you think.
Be aware that the US and UK have different gifting rules, such as the annual gift exemption of $19,000 in the USA for 2025, compared to £3,000 in the UK. The annual gift exemption is set to remain at $19,000 in the US in 2026.
Gifting as part of a long-term financial and estate planning can significantly improve the post-tax legacy left to an individual’s beneficiaries. Planning early and making steady progress each year is often the most efficient way to proceed.
The UK introduced significant changes for new residents in April 2025, replacing the previous remittance basis regime with the introduction of the Foreign Income and Gains (FIG) regime. Under FIG, assets previously outside the scope of UK taxation last year may now be taxable. In addition, if you are a long-term resident, global assets may be subject to UK Inheritance Tax.
However, the FIG regime offers an opportunity for individuals who previously filed under the remittance basis by using the Temporary Repatriation Facility (TRF). This enables you to bring previously untaxed foreign income and gains into the UK at a significantly reduced tax rate. To qualify, you must have previously have been a remittance basis user, making the 2024/25 UK tax return your last change to claim this basis.
These are just some of the areas to consider and discuss with your adviser. Partners Wealth Management has extensive expertise in supporting US taxpayer’s resident in the UK. We would be pleased to assist you with your financial planning and investment strategies, and work alongside your chosen tax advisers to planning is fully optimised.
Nathan Prior
Partner, Head of PWM International
nprior@partnerswealthmanagement.co.uk
020 7444 4053
The information in this article is provided for general guidance only and does not constitute personal tax, legal or investment advice. UK and US tax rules are complex and subject to change, and their application will depend on your individual circumstances. Before taking any action, you should seek advice from a suitably qualified UK and US tax professional.