Introduction
Accountants for US and UK who advise private equity partners relocating from the US to the United Kingdom face one of the most complex onboarding tax scenarios in cross-border practice. A mid-career PE partner arrives in London with existing carry positions in US-domiciled funds, co-investment rights in portfolio companies across multiple jurisdictions, a carried interest vehicle that may be structured as a limited partnership or a management company, and a US personal tax history that must be continued seamlessly alongside a new UK self-assessment obligation.
This guide covers the full US-UK tax position for a PE partner relocating to the UK mid-career — from the pre-arrival carry restructuring decisions through to the annual compliance program for a partner who receives carry in both US and UK funds simultaneously. Visit our advisory service:
https://www.jungletax.co.uk/services/us-uk-tax/
What Do US and UK Accountants Do?
Accountants for the US and UK for PE Partner Relocation
Accountants for US and UK for private equity partner relocation understand both the US tax history that the relocating partner carries with them — existing carry positions, co-investment basis, deferred compensation arrangements, 401(k) and IRA balances — and the UK tax framework that applies from the date of arrival — income tax on management fees, CGT on carry receipts, the FIG regime if applicable, and the UK SIPP available for new pension contributions. They also understand the specific US-UK treaty provisions governing the tax treatment of carry received by a UK-resident partner from US funds.
The IRS guidance on US citizens moving abroad is at:
https://www.irs.gov/individuals/international-taxpayers/us-citizens-and-resident-aliens-abroad
Why PE Partner Relocation Is Different From Standard Expat Planning
A standard employed expat in the UK has a salary, a PAYE tax deduction, and a straightforward FTC calculation. A PE partner relocating to the UK has a management fee income (ordinary income in both jurisdictions), carry receipts from existing US funds (taxed in the US and potentially also the UK depending on the treaty position), carry rights in new UK funds (taxed in the UK as qualifying CGT and potentially in the US under Section 1061), and co-investment positions in portfolio companies in multiple jurisdictions. Each of these income streams requires separate analysis under both the US and UK systems.
Why Accountants for the US and UK Are Essential for PE Partner Relocation in 2026
The Pre-Arrival Window Closes on UK Arrival Day
A PE partner who holds existing carry positions in US-domiciled funds faces a critical pre-arrival planning decision. Once a UK resident, carrying receipts from those US funds may also attract UK CGT. Before arrival in the UK, the same receipts are subject only to US federal tax. The pre-arrival window — before the Statutory Residence Test trigger date — is the optimal time to evaluate whether any carry distributions can be accelerated or restructured before UK arrival. The accountants for the US and UK at Jungle Tax model the pre-arrival and post-arrival tax position for each carry position before any UK arrival date is confirmed.
The FIG Regime May Apply to a New UK Arrival
A PE partner who has not been UK resident in any of the ten preceding tax years qualifies for the FIG four-year exemption — exempting qualifying foreign income and gains from UK income tax and CGT for four years. Carry receipts from US-domiciled funds during the FIG exemption period may be exempt from UK CGT — but that exemption also eliminates the FTC available on the US return for those receipts. The accountants for the US and UK model the FIG exemption versus opt-out for each year of the exemption period and each carry receipt.
Our guide to the FIG regime transition for US citizens is at:
https://www.jungletax.co.uk/jungle-tax-news-updates/irs-streamlined-filing-experts-non-dom-fig-transition/
Carry From UK Funds and Section 1061 Are Both in Play Simultaneously
A PE partner who joins a UK fund after relocation receives carry from a UK-managed fund — subject to UK qualifying CGT treatment (where the average holding period exceeds 36 months) and US Section 1061 analysis (where any underlying asset is held for three years or less). At the same time, the partner continues to receive carry from their existing US fund positions — subject to US ordinary income or capital gains treatment depending on each asset’s holding period. The accountants for the US and the UK manage the annual Section 1061 holding-period schedule for US funds and the qualifying CGT analysis for UK funds simultaneously.
The Pre-Arrival Planning Actions
Carry Position Review — Accelerate or Defer?
Before the UK arrival, the partner reviews all existing carry positions with the accountants for the US and the UK. The question for each position is: is it better to receive the carry before UK arrival (subject only to US federal tax) or after UK arrival (subject to both UK CGT and US federal tax, with FTC interaction)? Where a portfolio company is approaching realization, accelerating the distribution before the UK arrival date may result in a significantly lower combined tax. Where the position is early-stage with most of the value yet to be created, deferral may be more appropriate — because the post-arrival carry will qualify for UK BADR treatment if the fund’s average holding period exceeds 36 months.
Deferred Compensation — Form W-2 vs Deferred Amount
A PE partner who is leaving a US firm may have deferred compensation arrangements — amounts that were earned but not yet paid. Deferred compensation received after UK arrival may attract both US federal income tax and UK income tax in the year of receipt. Deferred compensation received before departure is subject only to US tax. The adviser reviews every deferred amount and advises on the optimal timing of receipt relative to the UK arrival date.
401(k) Rollover and Roth Conversion — Before Arrival
A 401(k) rollover to an IRA completed before UK arrival is a tax-free transfer governed only by US rules. A Roth conversion completed before arrival is taxable only in the United States at the applicable marginal rate, with no UK income tax interaction. After arrival in the UK, both actions may attract UK income tax. The accountants for the US and the UK calculate the optimal rollover and conversion amounts to be completed before the UK arrival date.
Co-Investment Basis — Record Before Arrival
Every co-investment position must have its US dollar cost basis recorded at the acquisition date and its fair market value recorded at the UK arrival date. The difference between the acquisition cost basis and the UK arrival date value is the pre-arrival gain, which is subject to US tax only. Post-arrival appreciation is subject to both UK CGT and US capital gains tax—the adviser’s adate valuation for each co-investment position before the UK arrival date passes.
The Post-Arrival Annual Compliance Programme
UK Self-Assessment — Management Fees and Carry
From the UK arrival date, the partner files both a UK self-assessment and a US federal return annually. The UK self-assessment covers: management fee income (taxed as income at UK marginal rates), carry receipts from UK funds (qualifying CGT treatment where the average holding period exceeds 36 months, income-based carried interest where it does not), and any other UK-source income. The US federal return covers worldwide income, including management fees (with FTC from UK income tax), carry from US funds (Section 1061 analysis for each position), and carry from UK funds (qualifying CGT treatment confirmed; FTC from UK CGT applied to the correct basket).
Section 1061 Holding Period Schedule — Maintained Annually
The Section 1061 holding-period schedule must be updated annually for every US fund position, tracking the acquisition date and the current holding period for each underlying portfolio company. A fund manager who joins from a US firm and remains invested in US fund carry positions maintains this schedule in parallel with the UK average holding period calculation for their new UK fund positions. The accountants for the US and UK maintain the holding-period schedule for both fund structures and apply the correct tax treatment to each carry receipt.
FBAR and Form 8938 — All UK Accounts From Arrival Day
From the UK arrival date, every UK financial account — current accounts, savings accounts, ISA, SIPP, investment accounts — must appear on the FBAR and Form 8938 where the applicable thresholds are met. The adviser establishes the FBAR account inventory as of the first day of UK residence and confirms peak balances from monthly statements for each account at each annual filing.
Case Study — US PE Partner Relocating to London
The Partner’s Position
Marcus is a US citizen. He is relocating from New York to London in September 2026 to join a UK private equity firm as a managing partner. He holds carry positions in two US-domiciled funds — Fund A (mid-life, one portfolio company approaching realization with a projected gain of approximately $2.8 million in his carry position) and Fund B (early-stage, most value yet to be created). He has a 401(k) worth $480,000, a deferred bonus of $220,000 payable in December 2026, and three co-investment positions in US portfolio companies.
The Pre-Arrival Actions
Jungle Tax modeled the pre-arrival and post-arrival tax positions for each carry element.
For Fund A — the approaching realization: Marcus requested an accelerated distribution of his carry from the Fund A portfolio company before the September 2026 UK arrival date. The carry of approximately $2.8 million was distributed in August 2026, subject to US long-term capital gains tax at 20 percent. No UK CGT arose. After UK arrival, the same receipt would have attracted UK CGT at 20 percent, in addition to the US liability, producing a combined rate of approximately 28 percent after FTC interaction.
For the deferred bonus: Marcus deferred the December 2026 bonus payment to January 2027 — after the UK arrival date — so it would be subject to UK income tax, generating an FTC to offset the US liability for the same amount. Paying the bonus in December 2026 (as a US-only year) would have generated no FTC. The January 2027 payment generates UK income tax of approximately £88,000 — producing FTC that offsets the US federal income tax on the same bonus entirely.
The 401(k) was rolled over to an IRA before departure. Co-investment position valuations were recorded on the August 2026 pre-departure date to establish the UK arrival-date base cost for each position.
The Outcome
The Fund A carry acceleration saved approximately $224,000 in combined UK CGT — by receiving the carry before UK arrival rather than after. The deferred bonus restructuring produced approximately $88,000 of FTC, eliminating the US federal tax on the bonus by attracting UK income tax in January 2027. The 401(k) rollover simplified post-arrival administration. The co-investment base costs were recorded — protecting the pre-arrival gains from UK CGT.
Common Mistakes for PE Partners Relocating to the UK
Not Modeling the Pre-Arrival vs Post-Arrival Tax on Each Carry Position
Not every carry position benefits from acceleration before UK arrival. The optimal timing depends on the Section 1061 holding period, the projected gain, the applicable UK CGT rate, and the FTC interaction. The accountants for the TS and UK model each position is independent, rather than applying a single rule across all positions.
Not Recording Co-Investment Base Costs at the UK Arrival Date
The UK arrival date valuation of every co-investment position is the base cost for UK CGT purposes. A partner who does not record this valuation at the time of arrival cannot later establish the pre-arrival gain and risks paying UK CGT on the full appreciation from the original acquisition cost to the eventual disposal.
Not Considering the FIG Exemption for New UK Arrivals
A PE partner who qualifies for the FIG four-year exemption may be able to receive carry from US funds during the exemption period without UK CGT. However, the FIG exemption also eliminates the FTC on those receipts — and may produce a higher combined tax than opting out and paying UK CGT to generate FTC. The adviser models both options for each carry receipt in each year of the exemption period.
Not Maintaining the Section 1061 Holding Period Schedule for US Fund Positions
A PE partner who relocates to the UK and continues to hold carry in US funds must maintain the Section 1061 holding period schedule for those positions — tracking the acquisition and holding period of every underlying portfolio company in every US fund. Missing the Section 1061 analysis for a US fund carry receipt results in an understatement of US ordinary income on the federal return.
The HMRC guidance on the Statutory Residence Test is at:
https://www.gov.uk/government/publications/rdr3-statutory-residence-test-srt
How Jungle Tax Can Help
Jungle Tax is a specialist US-UK cross-border tax advisory firm with accountants in the UK, including IRS Enrolled Agents and UK-qualified tax practitioners experienced in advising PE partners relocating from the US to the UK. We model the pre- and post-arrival tax positions for every carry position, deferred compensation arrangement, and co-investment holding. We record co-investment base costs at the UK arrival date. We establish the Section 1061 holding period schedule for all US fund positions and the qualifying CGT analysis for all UK fund positions. We prepare the annual UK self-assessment and US federal return simultaneously.
Read our guide to pre-departure planning when leaving the US:
https://www.jungletax.co.uk/jungle-tax-news-updates/accountants-for-us-and-uk-pre-departure-planning/
Conclusion
A PE partner relocating to the UK mid-career needs accountants for the US and UK who understand both the US carry history and the UK tax framework that applies from arrival day — and who can model every pre-arrival decision before the Statutory Residence Test trigger date passes.
Three points matter most. First, model every existing carry position before the UK arrival date — some benefit from acceleration before arrival, others from deferral into the UK fund carry structure. Second, record co-investment base costs at the UK arrival date — without that valuation, pre-arrival gains cannot be separated from post-arrival gains for UK CGT purposes. Third, consider the FIG exemption for new UK arrivals — but model the US FTC cost of claiming it before making the election.
Contact Us
Jungle Tax | mailto:hello@jungletax.co.uk | 0333-8807974 | https://www.jungletax.co.uk
