US Tax Help for Wealthy Britons Living in Los Angeles US tax help Los Angeles — that’s what every high-net-worth British national in LA eventually searches for. Living in Los Angeles is a dream for many. But the US tax system bites harder than most Britons expect. California has the highest state income tax in […]
US tax help Los Angeles — that’s what every high-net-worth British national in LA eventually searches for.
Living in Los Angeles is a dream for many. But the US tax system bites harder than most Britons expect.
California has the highest state income tax in the country — 13.3% at the top rate. Add federal tax at 37%. Then factor in HMRC still chasing UK-source income.
It’s a complex, expensive, and unforgiving system if you don’t plan correctly.
This guide explains the key US and UK tax obligations for wealthy Britons in LA — and how to structure your affairs to avoid overpaying.
Our US-UK cross-border tax service is at https://www.jungletax.co.uk/services/us-expat-tax/
Once you’re a US resident — through a green card or the Substantial Presence Test — the IRS taxes your worldwide income.
That includes your UK rental income, dividends from UK companies, trust distributions from UK family trusts, and any UK pension payments.
It doesn’t matter that HMRC already taxed it. The IRS expects its share unless you apply treaty relief and Foreign Tax Credits correctly.
Missing this creates double taxation — not because the law requires it, but because the forms weren’t completed.
California doesn’t recognise most international tax treaties. That means state-level relief is limited.
If you’re a California resident, you owe state income tax on your worldwide income — in addition to federal.
California’s top rate of 13.3% applies to income over $ 1 million. For wealthy Britons with significant UK-source earnings, this creates a painful stack.
Careful residency planning — including understanding the California exit tax rules — is essential before you arrive or depart the state.
This is exactly why wealthy Britons moving to LA need specialist US tax help los angeles advisers who understand both the federal and state layers.
https://www.irs.gov/individuals/international-taxpayers/taxation-of-nonresident-aliens
Moving to LA doesn’t automatically end your UK tax residence. The UK Statutory Residence Test (SRT) determines whether you remain UK-resident.
If you still have a UK home, visit too often, or haven’t fully severed UK ties, HMRC may still treat you as UK-resident — taxing worldwide income on both sides of the Atlantic.
The SRT has specific rules around days spent in the UK, automatic overseas tests, and sufficient ties. Getting this wrong is expensive.
https://www.gov.uk/tax-foreign-income/residence
UK rental income remains taxable in the UK regardless of your residence status. HMRC will tax it under the Non-Resident Landlord Scheme.
UK pension income may also remain taxable in the UK — depending on the pension type and treaty elections made.
UK dividends and trust distributions may be taxable in both countries, with the treaty allocating primary rights and the FTC eliminating the double charge.
The US-UK Double Taxation Treaty — updated via Competent Authority Agreements in 2021 — governs this allocation.
https://www.gov.uk/government/collections/tax-treaties
If you’ve paid UK tax on UK-source income, you can claim a Foreign Tax Credit on Form 1116 against your US federal liability on the same income.
This eliminates federal double taxation in most cases. California doesn’t offer the same credit — state tax is an additional layer.
The FTC must be correctly categorised into passive and general income baskets. Errors in basket allocation result in overclaiming or underclaiming.
Selling UK property or investments after becoming a US resident triggers US tax on the gain — even if you also pay UK CGT.
Timing disposals before establishing US residency can significantly reduce the overall tax bill.
If disposal after arrival is unavoidable, the treaty and FTC must be applied together to minimise the combined rate.
For every wealthy Briton in LA, access to proper US tax help los angeles before making any major disposal is essential.
US residents must file Form 1040 annually. FBAR is required if UK accounts exceed $10,000 in aggregate at any point during the year.
Form 8938 FATCA is required for UK assets above $200,000 for single filers resident abroad.
UK self-assessment may still be required for UK-source income even after departure — particularly rental income and pension income.
https://www.irs.gov/businesses/small-businesses-self-employed/report-of-foreign-bank-and-financial-accounts-fbar
A British entrepreneur — we’ll call him James — relocated to Beverly Hills on an E-2 investor visa. He had UK rental properties generating £80,000 per year and a UK investment portfolio worth £2.1 million.
He filed a California state return and a federal Form 1040 in his first year. But neither return claimed Foreign Tax Credits on the UK rental income — already taxed by HMRC at 40%.
Result: he paid UK income tax at 40% on the rental income and federal income tax at 37% on the same income. Combined effective rate on UK rental: over 60%.
He also missed FBAR filing for three UK accounts — triggering potential penalties of up to $49,000.
The Jungle Tax team reviewed three years of filings. We amended the federal returns to claim Foreign Tax Credits on Form 1116 for UK rental income tax paid.
The amended returns recovered approximately $38,000 in over-paid federal tax across two years.
We filed the delinquent FBARs under the IRS Delinquent FBAR Submission Procedures — avoiding all penalties, as the income had been fully reported.
We also established a going-forward plan: annual FBAR, Form 1040 with FTC, coordinated UK self-assessment, and pre-disposal modelling for the investment portfolio.
James now has the full specialist US tax help Los Angeles he needed from the start — including coordinated UK and US filings under one roof.
$38,000 recovered in over-paid federal tax. Zero FBAR penalties. Clean compliance established going forward.
The investment portfolio disposal plan identified that selling in the UK before any US liquidity event would significantly reduce the combined CGT exposure.
They don’t. The IRS taxes worldwide income independently. UK tax paid reduces — but doesn’t eliminate — US liability.
The reduction only happens through correctly filed Foreign Tax Credits. Without Form 1116, you pay in both countries.
UK current accounts, savings accounts, ISAs, and SIPPs are all foreign financial accounts for FBAR purposes.
If the aggregate balance exceeded $10,000 at any point during the year, FinCEN Form 114 is required.
Penalties for non-filing can reach $16,536 per violation for non-willful failures.
https://www.irs.gov/businesses/small-businesses-self-employed/report-of-foreign-bank-and-financial-accounts-fbar
California is aggressive about residency. Simply leaving doesn’t end your California tax obligation.
You must demonstrate a clear break in domicile — including changing driving licence, voter registration, and primary residence.
Failing to do this leaves you exposed to California franchise tax on worldwide income long after you’ve left.
A UK accountant prepares UK returns. They’re not trained in Form 1040, FBAR, Form 8938, or California state filings.
A US accountant prepares US returns but may miss the UK treaty elections that reduce your overall bill.
You need a dual-qualified specialist who handles both — simultaneously.
Jungle Tax provides specialist US-UK cross-border tax advisory for British nationals in the United States.
Our team prepares coordinated US Form 1040, California state returns where required, UK Self Assessment, FBAR, Form 8938 FATCA, and treaty position analysis under one engagement.
We hold qualifications under the Chartered Institute of Taxation (CIOT) and maintain current expertise in IRS compliance, California tax rules, and the US-UK Double Taxation Convention.
Our US expat tax advisory is at https://www.jungletax.co.uk/services/us-expat-tax/. Contact us at hello@jungletax.co.uk or call 0333-8807974.
Don’t overpay in two countries when the law provides relief.
Email: hello@jungletax.co.uk
Phone: 0333-8807974
Web: https://www.jungletax.co.uk/contact/
Yes — if you’re a US resident. The IRS taxes worldwide income once you meet the residency threshold.
But Foreign Tax Credits on Form 1116 offset UK tax already paid, reducing or eliminating federal double taxation.
California state tax is an additional layer and doesn’t recognise most treaty credits.
It depends on your UK residence status under the Statutory Residence Test.
UK rental income remains taxable in the UK regardless of where you live.
UK pensions and dividends may also remain taxable — depending on treaty elections made on your US return.
Yes — through FBAR (FinCEN Form 114) if the aggregate balance exceeded $10,000 at any point.
This includes current accounts, savings accounts, ISAs, and SIPPs.
Penalties for non-filing are severe even for non-willful failures.
Not alone. A UK accountant prepares UK returns but is not qualified to file Form 1040, FBAR, or Form 8938.
You need a dual-qualified adviser who handles both UK and US obligations under one roof.
Jungle Tax provides this integrated service for British nationals in the US.
California taxes gains on all assets when a resident leaves the state.
This can apply to UK assets that appreciated while you were California-resident.
Planning departure timing and asset structure before leaving California significantly reduces exposure.
