The US–UK tax glossary
Two systems, two vocabularies. Each term below is explained in plain English — with its closest counterpart on the other side of the Atlantic, because that’s usually the question that matters.
- 1040US
- The US individual federal income tax return. US citizens and Green Card holders generally file one annually on worldwide income, wherever they live.↔ UK: Self Assessment return (SA100)
- Self AssessmentUK
- The UK system for reporting income HMRC doesn't already tax at source. Filed online by 31 January after the tax year ends.↔ US: Form 1040
- FBAR (FinCEN 114)US
- An annual report of non-US financial accounts, required when their combined highest balances exceed $10,000. Filed with FinCEN, separately from the tax return.↔ UK: no direct equivalent
- FATCA / Form 8938US
- A tax-return disclosure of specified foreign financial assets above thresholds that depend on residence and filing status — on top of, not instead of, the FBAR.↔ UK: no direct equivalent
- FEIE (Foreign Earned Income Exclusion)US
- An election allowing qualifying Americans abroad to exclude a capped, inflation-adjusted amount of foreign earned income from US tax (Form 2555).↔ Alternative: Foreign Tax Credit
- Foreign Tax CreditBoth
- A credit for tax paid to the other country on the same income — the main mechanism preventing double taxation. Claimed on Form 1116 in the US; via the foreign pages in Self Assessment.↔ Both systems, mirrored
- US–UK tax treatyBoth
- The bilateral convention allocating taxing rights between the two countries — vital for pensions, Social Security, dividends and residency tie-breakers. Some positions must be disclosed on Form 8833.
- Statutory Residence Test (SRT)UK
- The day-count and ties-based test that determines UK tax residence for a tax year.↔ US: citizenship/Green Card taxation, or the Substantial Presence Test for others
- Substantial Presence TestUS
- The day-count test that can make a non-citizen a US tax resident based on time physically spent in the US over three years.↔ UK: Statutory Residence Test
- FIG regime (foreign income & gains)UK
- The regime that replaced the remittance basis from 6 April 2025: qualifying new UK arrivals can claim relief on foreign income and gains for their first four years of residence.↔ US: no equivalent — worldwide taxation from day one
- Split-year treatmentUK
- Rules that can divide a UK tax year into resident and non-resident parts in the year you arrive or leave, when conditions are met.↔ US: dual-status return
- Dual-status returnUS
- A US return covering a year in which someone was a US tax resident for part of the year and a non-resident for the rest — common in Green Card arrival/departure years.↔ UK: split-year treatment
- ISAUK
- A UK tax-free savings/investment wrapper. The US does not recognise the wrapper: income and gains inside an ISA are taxable to US persons, and funds held inside can be PFICs.↔ US: no true equivalent (Roth IRA is the loose analogue)
- PFICUS
- Passive Foreign Investment Company — the punitive US regime that catches most non-US funds and ETFs, taxing gains at unfavourable rates with dense reporting on Form 8621.↔ UK mirror-image: non-reporting offshore funds
- HMRC reporting fundUK
- A non-UK fund with HMRC reporting status, keeping gains within capital gains treatment for UK investors. The UK's mirror image of the PFIC problem — US-domiciled funds without this status are penalised in the UK.↔ US: PFIC rules
- 401(k)US
- A US employer-sponsored retirement plan funded from pre-tax salary.↔ UK: workplace pension
- IRA / Roth IRAUS
- US individual retirement accounts — traditional (pre-tax, taxed on withdrawal) and Roth (post-tax, tax-free growth and qualified withdrawals). Treaty treatment in the UK differs between them.↔ UK: SIPP (loosely); no true Roth equivalent
- SIPPUK
- Self-Invested Personal Pension — a personal UK pension with investment control. Its US treatment raises genuine technical questions, from treaty relief to trust-reporting exposure.↔ US: IRA (loosely)
- State PensionUK
- The UK's contributions-based government pension.↔ US: Social Security
- Social SecurityUS
- The US government retirement and disability system. Under the treaty, US Social Security paid to a UK resident is generally taxable only in the UK.↔ UK: State Pension
- Totalization agreementBoth
- The US–UK social security agreement preventing double social-security contributions and helping combine contribution records across both countries.
- Streamlined Foreign Offshore ProceduresUS
- The IRS programme letting non-wilful late filers abroad catch up — generally three years of returns and six years of FBARs — with the usual failure penalties waived.↔ UK: voluntary disclosure via HMRC
- Payments on accountUK
- Advance payments towards the current year's UK tax bill, due 31 January and 31 July, based on last year's liability.↔ US: quarterly estimated taxes
- Estimated taxesUS
- Quarterly prepayments of US tax where withholding won't cover the bill — commonly needed by self-employed expats.↔ UK: payments on account
- Capital gains tax (CGT)Both
- Both countries tax gains, but with different rates, exemptions, and — crucially — different currencies: the US computes gains in dollars, so exchange-rate movement alone can create a taxable US gain.
- IHT (Inheritance Tax)UK
- UK tax on estates and some lifetime gifts, now based on long-term residence rather than domicile.↔ US: federal estate & gift tax (with a far larger exemption)
- GILTIUS
- A US anti-deferral regime that can tax US owners of controlled foreign companies — including a one-person UK limited company — on the company's profits as they arise.↔ UK: no equivalent for individuals
- Form 5471US
- The detailed US information return often required from US persons who own significant stakes in non-US companies, such as a UK Ltd. Heavy penalties for non-filing.↔ UK: no equivalent for individuals
- Accidental AmericanUS
- Someone with US citizenship — usually by birthplace or parentage — who has lived their life elsewhere and often only discovers their US tax obligations decades later.
- Payment on 60-day reportUK
- UK residential property sales with tax due must be reported and the CGT paid within 60 days of completion — separate from, and earlier than, Self Assessment.↔ US: reported on the annual 1040
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