What does it mean to Renounce US Citizenship in the UK?

This process involves giving up your American rights and entitlements as you continue to reside in the UK.

This act must be voluntary and with solid intent because it is permanent and irrevocable, which is why it is considered a major life decision for others. After these changes, you will maintain your residency in the UK and continue to be subject to its laws and regulations.

What are my rights and privileges as a US citizen?

Being a US citizen offers numerous advantages, such as but not limited to having the right to vote, unrestricted ability to live, work, and reside in the US, eligibility for various government programs like Social Security and Medicare, education, and the right to protection abroad. 

If you plan on permanently living in the UK, these benefits might not be as beneficial to you. However, if you’re still a US citizen, you’re still responsible for paying taxes in the US to help fund these.

Why do people consider renouncing their US citizenship?

People who want to renounce US citizenship in the UK often do so because they face many compliance requirements while living abroad; they can be subject to double taxation, are restricted from investment opportunities in the UK, and simply see no need to return to the US.

Is it financially sensible to maintain your US citizenship?

It entirely depends on your financial standing; however, filing a US tax return in the UK is already an important financial responsibility you can’t ignore. Additionally, opting for investment opportunities in the UK can be limiting. 

In the rising inflation we’re currently experiencing, getting investment to fight it is smart. For US expats, there are additional steps you need to consider to maximize your returns, as you can be fighting for extra fees, charges, and additional tax.

Weighing out the benefits and the disadvantages can help determine whether to renounce US citizenship in the UK.

Can you lower your tax liabilities in the US?

Yes, there is a US-UK income tax treaty that helps US citizens living in the UK reduce their tax obligations.

The IRS provides tax benefits such as the Foreign Tax Credit (FTC) and the Foreign Earned Income Exclusion (FEIE).

Foreign Tax Credit (FTC) and the Foreign Earned Income Exclusion (FEIE)

FTC lets you claim credit or offset for taxes you’ve already paid in the UK on income earned there. This helps avoid taxing twice on the same income by the UK and the US.

FEIE lets you reduce your taxable income by excluding a portion of the earnings you made in the UK. To qualify, you must meet specific residency criteria, and for 2024, you can exclude up to US$126,500.

Generally, the Foreign Tax Credit can help you save more as the UK’s tax rates are higher than the US. This can cancel out your US tax and let you carry forward unused credits for up to 10 years. 

Keep in mind that these benefits apply only in certain situations and don’t completely eliminate your tax obligations.

How do I renounce my US Citizenship in the UK?

You can book an appointment at the US Embassy in London or the US Consulate in Belfast. The US Consulate in Edinburgh is not currently taking appointments until further notice. 

Please be advised that you must appear in person before a US consular officer. Electronic submissions or representation through agents are strictly prohibited.

Here are the steps you need to take:

1. Gather your requirements: To start this process, you need to meet the legal requirements—for more details, consult the IRS and the London Federal Benefits Unit (FBU).
2. Setting an appointment: You must make an appointment and meet with a consular officer to commence an in-person interview at the US Embassy in the UK. The interview is mainly about explaining why you want to give up your US citizenship, in which the consular officer will evaluate your reasons.
3. Filing and payment: You must submit documents matching your situation, especially Form DS-4079. The renunciation fee for 2024 is US$2,350 or 1789.55 GBP, which you can pay in cash in US dollars or the equivalent in British pounds. 
4. Administering oath: Once you have completed and passed all the required steps, you will take the Oath of Renunciation, officially confirming to renounce your US citizenship in the UK.

It is essential to note that this process may require several months to complete as each stage undergoes a meticulous process. 

If you're short on time and availability, seeking assistance to renounce US citizenship in the UK can be very beneficial, especially abroad. you can take a look at what fits your situation best.