Impending tax hike looms for Americans in the UK following general elections

Americans residing and working in the UK might face increased tax rates due to outcomes from the UK general election and the US presidential election this November.

Alex Straight, a Partner at Blick Rothenberg, a British audit, tax, and business advisory firm, and spokesperson for the firm’s international group, highlighted, “For Americans, this is the warm-up ahead of the main event of the US election in November.”

He elaborated, “With Labour’s historic landslide victory, they’ve received a mandate to implement a long-term tax strategy. While their manifesto pledges to keep income tax, national insurance, VAT, and corporation taxes unchanged, the non-dom tax changes introduced by the previous Conservative Government and retained by Labour will significantly impact many Americans in the UK. Historically, the non-dom tax regime allowed many Americans in the UK to avoid tax liabilities on their non-UK income and gains. This will no longer typically be the case moving forward. Additionally, Labour has not committed to capital gains tax rates. Presently, the UK’s main capital gains tax rate is comparable to that of the US, but any increase or changes, especially concerning carried interest, will elevate the global effective tax rate for Americans in the UK.”

Straight continued, “To balance the books without major headline tax increases, growth is essential. We hope this is reflected in any proposed tax policy given Labour’s healthy majority. The UK has always been a favourable destination for Americans to live and work. However, while the UK enjoys a large majority government, a similar outcome in the US is less likely this November. This year, marked by elections and change, sees the first piece of the puzzle fitting into place. We should gain more clarity with the first UK Budget expected in September. The US election, however, promises to be much closer, bringing more uncertainty regarding the future US tax landscape and its effects on Americans in the UK.”