Life in the UK as a Canadian or American

The United Kingdom remains one of the most popular destinations for Canadians and Americans living abroad. Career opportunities, cultural familiarity, a strong legal system, and global connectivity make the UK an attractive option for professionals, retirees, and internationally mobile families alike.

However, moving to the UK is not merely a lifestyle decision- it carries significant tax and residency consequences, both in the UK and in your home country. Many individuals underestimate how quickly UK tax exposure can arise and how easily cross-border reporting obligations can overlap.

This guide outlines what Canadians and Americans should understand when living in the UK, with a focus on tax residency, compliance, and long-term planning considerations.

One of the most common misconceptions is that visa status determines tax residency. In reality:

• Immigration status governs your legal right to live and work in the UK
  
  

• Tax residency determines where and how you are taxed
  
  

In the UK, tax residency is governed by the Statutory Residence Test (SRT). Residency can be established based on:

• Days spent in the UK
  
  

• Ties to the UK (employment, accommodation, family)
  
  

• Prior UK residency history
  
  

It is entirely possible to become UK tax resident within your first year, even on a temporary visa.

Once UK tax residency is established, worldwide income becomes relevant for UK tax purposes.

UK tax residents are generally subject to UK tax on:

• Employment income
  
  

• Self-employment income
  
  

• Investment income
  
  

• Capital gains
  
  

Certain individuals may qualify for the remittance basis in limited circumstances, but this regime has become more restrictive and is not a long-term planning solution for most.

• Income tax rates are progressive, with higher marginal rates applying relatively quickly compared to North America
  
  

• Capital gains are taxed separately and subject to specific exemptions and rates
  
  

• UK does not tax capital gains on a principal residence if conditions are met, which can be favorable for homeowners

Even as a non-resident, Canadians may still be subject to:

• Canadian withholding tax on pensions, dividends, or rental income
  
  

• Canadian filing requirements in certain situations
  
  

Careful coordination is required to avoid double taxation and compliance gaps.

👉 Read more on ongoing filing obligations as a Non-resident of Canada

Americans living in the UK often rely on:

• The Foreign Earned Income Exclusion (FEIE)
  
  

• Foreign tax credits
  
  

• The US–UK tax treaty
  
  

While these tools can reduce or eliminate double taxation, they require careful planning and consistent reporting.

The UK maintains comprehensive tax treaties with both Canada and the United States. These treaties help:

• Determine tax residency in tie-breaker situations
  
  

• Allocate taxing rights between countries
  
  

• Prevent double taxation on income and gains
  
  

However, treaties do not eliminate filing obligations, and relief is not automatic. Proper application requires:

• Understanding treaty articles
  
  

• Aligning filing positions across jurisdictions
  
  

• Maintaining consistent residency positions

• London remains expensive, particularly for rent
  
  

• Regional cities (Manchester, Birmingham, Leeds) offer more affordability
  
  

• Council tax applies annually and varies by property band

UK residents typically access the National Health Service (NHS)

Immigration health surcharges may apply for visa holders

Private health insurance is often used to supplement NHS access

Opening UK bank accounts is usually straightforward once residency is established, but:

• Foreign investment income can create reporting complexity
  
  

• Certain UK investment products may be inefficient or problematic for US taxpayers
  
  

This is an area where advance planning is particularly important.

Some of the most frequent issues encountered include:

• Becoming UK tax resident unintentionally
  
  

• Failing to plan for Canadian departure tax
  
  

• Assuming US tax obligations cease abroad
  
  

• Holding incompatible investment structures across jurisdictions
  
  

• Delaying professional advice until compliance issues arise
  
  

These mistakes are often far more expensive to fix after the fact.

Living in the UK can be professionally rewarding and personally enriching for Canadians and Americans. However, the tax and reporting landscape becomes significantly more complex once borders are crossed.

The most effective outcomes occur when:

• Residency is planned deliberately
  
  

• Departure and arrival tax rules are coordinated
  
  

• Reporting obligations are understood in advance
  
  

Cross-border moves should be approached as a multi-year planning exercise, not a one-time filing issue.

If you’re considering a move to the UK or are already living there, professional cross-border tax advice can help ensure compliance while avoiding unnecessary tax exposure.