In this article, Adam Jefferies, Private Client Director at PKF, explores the implications of the UK Autumn Budget for US individuals considering a move to the UK. Adam examines the latest tax changes and highlights key opportunities and potential pitfalls for internationally mobile individuals planning a cross-border relocation.
Whilst the Budget 2026 tax headlines were taken up by higher-than-expected tax rises to savings and rental income, an extremely narrow Capital Gains Tax (CGT) relief in Founders’ Relief, and a £100 giveaway to help with energy bills, there were positive announcements aimed at foreign nationals, especially from the US, that may have flown under the radar.
Firstly, following a consultation in the summer, there are changes to how Limited Liability Companies (LLCs), and other ‘reverse hybrid’ structures, are taxed. LLCs are very common as both trading and investment vehicles in the US and currently cause significant double taxation issues where the owner is resident in the UK.
In addition, a reform of the CGT regime on ‘temporarily migrated trusts’ has been announced.
Trust residence and the previous tax position
The tax residence of trusts is determined by the residence status of its trustees. If a trustee moves to the UK and becomes UK tax resident, then this can also bring the trust into the UK tax net as well.
The impact of this is that the worldwide income arising within the trust is subject to UK income tax. However, an even larger issue is that, if the trust ceases to be UK resident again, it was subject to a CGT exit charge based on the market value of the assets as at that date. Where assets were sitting at a significant gain and the trust was inadvertently made to be UK tax resident, this could have been a very costly issue. Especially as this was a ‘dry’ tax charge, given that no assets were actually sold, meaning that the funds to pay the tax had to be generated somehow out of the existing assets.
New rules
Applying from the date of the Budget itself (a relatively rare and positive timescale), this exit charge is not applicable where a trust ceases to be UK resident in the same or following tax year. This is clearly aimed at not punishing those individuals who have had to move to the UK quickly with not enough time to consider their wealth structures as a whole before arriving. There is now some breathing space for them to review their position once they have arrived and rectify anything that may have caused inadvertent tax problems.
Given trusts are very common in the US for asset protection and succession planning, it is clear that, along with the LLC changes, there is a concerted effort to ensure that the UK’s tax regime does not cause problems for wealthy Americans moving to the UK, which has not necessarily been the case to date.
However, these rules do not stop income tax charges arising on the income within the structures during the residence period, and actual disposals of assets will remain subject to CGT. Care also needs to be taken with respect to the inheritance tax position depending on the settlor’s residence situation and it is strongly recommended to get advice prior to any relocation. As always, expert advice is required when dealing with cross-border matters.
Explore our Autumn Budget 2026 Hub to discover the latest tax, business and financial services insights following the Chancellor’s announcements.
How we can support you
For more information, contact Partner and Head of Private Client Tax, Stephen Kenny or Private Client Director, Adam Jefferies.
