FATCA overview
The USA introduced the Foreign Account Tax Compliance Act (FATCA) in 2010. FATCA requires US citizens, including those with dual nationality, to report financial assets held abroad to the US Internal Revenue Service (IRS).
Parents should ensure they understand the implications of FATCA and make informed decisions based on their family’s circumstances.
US citizenship
Children born in the USA automatically gain US citizenship in addition to any other nationality from their parents. This applies to children of service or civilian personnel who are born in the USA.
Renouncing US citizenship
From age 18, US citizens can renounce their US citizenship. This process is irreversible and costs approximately £1,850. It must be done personally at the US Embassy in London.
Further guidance is available on the US Embassy website.
Dual UK/US citizenship
Families with children who hold dual UK/US citizenship should be aware of:
- the option to renounce US citizenship at 18
- the potential tax implications if citizenship is retained
- FATCA’s reporting requirements
Professional advice can help ensure tax affairs are managed correctly.
Reporting financial assets
US citizens living outside the USA must report assets worth over $200,000 if they file a US tax return.
Dual UK/US citizens may be exempt from US taxation if:
- their foreign-earned income is below the exclusion threshold (approximately £81,000)
- their UK tax affairs are in order
More information is available on the IRS website.
USA-UK double taxation agreement
The USA and the UK have a tax treaty to avoid double taxation: USA: tax treaties.
Financial institutions and FATCA
UK financial institutions must provide information about US citizens’ financial assets to meet FATCA requirements. While this is not legally required under UK law, most institutions comply to maintain operations in the USA.
Updates to this page
Published 8 January 2025