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How to Renounce US Citizenship in the UK

Taxation & VAT Specialists


 
Whether you are an accidental American or cannot carry the burden of responsibilities of being a US citizen, you can renounce your nationality in the UK for reasons you deem worthy.
  But be careful; once you renounce your US citizenship, there’s no going back! It’s irrevocable. It is also a legal and formal process that will take time and money. So, it’s better to understand the implications first before making your move.

Tax implications 

It should be noted that you must have been fully compliant with your US taxes for the last five years prior to your renunciation. If there are instances that you miss out on paying your US taxes or not filing US returns at those times, you may have to pay “exit tax.”
  Exit Tax  
If you were non-compliant on reporting and paying your US taxes, this is the tax you pay before renouncing to ensure you haven’t left any debts or responsibilities behind. There are other reasons why you might pay exit tax:
 
  • If your net worth is US$2 million or more when you decide to renounce.
  • Your average annual net income liability exceeds US$190,000 for the past five years.
 
In addition, you will be taxed on unrealized gains exceeding US$821,000 (for 2023). If you meet all of these then you are considered a “covered expatriate” and the IRS will require for you to settle this.
 
Final Dual-Status Tax Return
 
The year that you renounce your US citizenship, you need to file a “dual-status” tax return as you have been both a US resident and a nonresident in the same tax year. 
  You can use Form 8854 for this one, which will allocate your income when you were a US citizen and the date you’re not anymore.
  Post-Renunciation Taxation  
Once you renounced your nationality and are no longer a US citizen, only your US-sourced income will be taxed by the IRS as opposed to your worldwide income. This should include any investments, rental properties, or businesses you have left in the US. 

Steps to renounce US citizenship in the UK

Here’s a breakdown of the steps you need to take to renounce your US citizenship in the UK:
 
  1. Another citizenship: You need to be a dual citizen or at least acquire a second passport. Without these, you’re unable to renounce your US citizenship, and we don’t want you to be stateless after you renounce it.
  2. Acquire the required forms: Depending on your embassy, you might fill in the requirements in front of the consular office or beforehand. Here are some forms that you might need in connection to your renunciation:
  • Form DS-4079: “Request for Determination of Possible Loss of United States Nationality”
  • Form DS-4080: “Oath/Affirmation of Renunciation of Nationality of United States”
  • Form DS-4081: “Statement of Understanding Concerning the Consequences and Ramifications of Renunciation or Relinquishment of U.S. Nationality”
  1. Prepare necessary documents: This includes evidence of your US citizenship, such as a US passport or birth certificate, your UK or other foreign passport, and other relevant documents.
  2. Book a renunciation appointment: Schedule an in-person appointment with the US Embassy in London or other available consular offices. It is vital that you do this in person, and it is not applicable to mail your papers.
  3. Attend said appointment: Prepare the needed documents and the renunciation fee of US$2,350 or £1,789.55. You will undergo an interview to confirm your voluntary decision and sign the Oath of Renunciation.
  4. Wait for approval: Your case will be passed to the State Department for evaluation and ultimately, for approval. This will usually take a few months.
  5. File your Final Tax Return: After approval, you must file your Form 1040, your final tax return together with Form 8854, to the IRS if you are a “covered expatriate.” You will also need to write  “Dual-Status Return” on your tax return 

Statelessness 

You’re considered a stateless person if you have no citizenship in any country, which should be a prerequisite since it’s your bond between a nation, the government and you as an individual.
  That’s what we’re trying to avoid because statelessness can bring you difficulties with basic necessities like traveling, obtaining a passport, finding employment, accessing medical services, and ultimately, no legal protection.

Accidental Americans planning to renounce US citizenship

US citizens who unknowingly know their American heritage usually do not comply with US tax or bureaucratic requirements. An accidental American can stem from birth or parentage.  
Luckily, there is a relief program to comply with US requirements so they won’t be labeled as “covered expatriates” and can renounce their US citizenship. So, you might be relieved of the exit tax, penalties, and other past liabilities to US taxes.  
Of course, this comes with non-willful intent that the IRS will investigate to confirm. As long as it was a good-faith misunderstanding, then you’re good to go.

Renouncing citizenship versus involuntary losing 

Involuntarily losing US citizenship is rare and typically occurs under specific circumstances or to perform an “expatriating act.” While renouncing your US citizenship comes with an intent to relinquish it.
  Involuntary loss of US citizenship can result from running for public office in a foreign country, performing military service in a foreign country, committing acts of treason, or denaturalization.

Expatriating Act

An expatriating act is something that you do that can make you lose your US citizenship as per the Immigration and Nationality Act (INA) and the Internal Revenue Code (IRC).   
This can include:
 
  • Foreign government employment
  • Foreign military service
  • Denaturalization
  • aturalization in a foreign country
 

After renunciation

You will receive a Certificate of Loss of Nationality (CLN) after your renunciation case is approved. This is the official document that confirms that you are no longer a US citizen.
  You will need to surrender your passport and ensure you have settled all your legal and tax obligations in the US. You also need to notify financial institutions like your bank and update your legal documents of your new citizenship status.
  Traveling to the US
You will need to apply for a Visa to be able to visit the US or other certain countries. Usually, a visitor visa is enough but it also depends on your reason going to US, some choose tourism, business, or even a study visa. 
  Social Security benefits
  You can continue to receive Social Security benefits even after you renounce your citizenship if you are eligible for it. The Social Security Administration can send payments to most countries, but there are some exceptions.

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How to Renounce US Citizenship in the UK
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