presentation Wealth Insights | presentation US Families | November 19, 2025

The Big Beautiful Bill: What It Means for Americans Living in the UK

Written by Rory Dorman, ACA

As autumn settles in and Thanksgiving approaches, the celebrations of the Fourth of July already feel like a distant memory. The timing was deliberate. President Trump gave Congress a 4 July deadline to finalise the One Big Beautiful Bill (BBB), which he promised would “turn the country into a rocket ship.”

Now that there has been time to understand the changes in more depth, it is worth considering what this legislation really means for Americans at home, as well as those living in the United Kingdom.

From the TCJA to the Big Beautiful Bill

President Trump’s first term saw the introduction of the Tax Cuts and Jobs Act (TCJA) in 2017. This brought significant changes including reduced tax rates for both individuals and corporations, a higher standard deduction, increased family tax credits and a doubling of the lifetime estate and gift tax exemption.

Many of those measures were originally due to expire at the end of 2025. The BBB has now extended most of them indefinitely while adding new elements such as no federal tax on tips or overtime, and a new remittance tax.

While the domestic implications are now fairly clear, the impact on US citizens living abroad, particularly those in the UK, requires a closer look.

Income Tax: Lower US Rates, Limited Benefit for UK Residents

The BBB confirms the lower income tax bands introduced in 2017. The top marginal rate remains at 37 per cent, while the 33 and 28 per cent brackets fall to 32 and 24 per cent respectively.

Although US tax brackets are usually indexed for inflation, the BBB only applies inflation adjustments to the lower bands, between 10 and 22 per cent. As wages rise, this will gradually push more American taxpayers into higher brackets.

In 2025, a single filer will not reach the top federal tax rate of 37 per cent until earning more than $626,351. By contrast, in the UK, income above £125,140 is taxed at 45 per cent.

For most Americans living in the UK, these lower US tax rates make little difference. Under the US–UK Double Tax Agreement, UK tax generally takes priority, with any US liability often reduced through Foreign Tax Credits.

That said, Americans with surplus foreign tax credits may have opportunities for tax planning. In certain situations, a move to a low-tax jurisdiction could allow unused credits to offset future income, reducing overall US tax exposure.

Estate and Gift Tax: Wide Gap Between the US and UK

The unified gift and estate tax exemption was one of the most striking features of the 2017 tax reform, doubling to $11.2 million per person. With inflation, that figure has risen to $13.99 million in 2025.

The BBB has gone further, increasing the threshold to $15 million per person, or $30 million for couples, with continued inflation adjustments.

While this offers reassurance for high-net-worth individuals in the US, the change provides little benefit for Americans in the UK. Anyone with UK assets exceeding £325,000, or who has been UK-resident for more than ten years, is likely to fall within the scope of UK Inheritance Tax.

Unless steps are taken to use the UK’s Potentially Exempt Transfer (PET) regime, the BBB will not prevent exposure to UK inheritance tax. There is also ongoing speculation that the PET regime may be reviewed in the upcoming Autumn Budget.

The New Remittance Tax

Early drafts of the BBB caused concern that a tax might apply to funds transferred out of the US. In the final version, a one per cent excise tax applies only to certain physical transfers such as money orders or cashier’s cheques sent abroad.

Transfers made through regulated financial institutions are excluded, meaning most Americans living in the UK will not be affected.

Other Provisions

The BBB introduced a $6,000 deduction for taxpayers aged 65 or over, designed to reduce the tax burden on Social Security benefits. However, as Social Security is taxable solely in the UK under the tax treaty, this change is of limited use to most expats.

A new deduction of up to $25,000 for qualified tip income also forms part of the bill, though again, this is of little relevance to those residing in the UK.

What the BBB Leaves Out

Despite early signals that President Trump might simplify or remove the worldwide taxation system applied to US citizens, the BBB does not include any reform of that kind. Americans abroad must still file annual US tax returns, in addition to meeting their local tax obligations.

The Bottom Line

The Big Beautiful Bill has brought lasting changes to the US tax code, but for Americans living in the UK, its practical impact remains limited.

What matters most for US expats is understanding how the two tax systems interact, particularly as the differences between US and UK rates continue to widen. For anyone managing cross-border wealth, estate or tax exposure, professional advice remains essential to stay compliant and make the most of available opportunities.

The Legal Stuff

  • This document is intended for the recipient only.
  • The information contained herein is subject to copyright with all rights reserved.  The document may not be copied, forwarded or otherwise distributed, in whole or in part, to any other party without our written consent.
  • Nothing in this document constitutes investment, tax or any other type of advice and should not be construed as such.
  • MASECO is not a tax specialist and we recommend that anyone considering investing seeks their own tax advice.
  • The views expressed in this article do not necessarily reflect the views of MASECO as a whole or any part thereof.
  • This document is provided for information purposes only and is not intended to be relied upon as a forecast, research or investment advice.
  • This document does not constitute a recommendation, offer or solicitation to buy or sell any products or to adopt an investment strategy.

Risk Warnings:

  • All investments involve risk and may lose value.  The value of your investment can go down depending upon market conditions and you may not get back the original amount invested.
  • Your capital is always at risk.
  • Fluctuation in currency exchange rates may cause the value of an investment and/or a portfolio to go up or down.
  • Alternative strategies involve higher risks than traditional investments, such as speculative investment techniques, which can magnify the potential for investment loss or gain.
  • Certain products which may be used within a portfolio in order to give exposure to particular investment strategies may not be regulated in the UK and therefore will not have the benefit of the protections afforded by the UK regulatory regime.

Performance:

  • Past performance is not a reliable indicator of future results.
  • No assurance or guarantee can be given that any target return will be achieved.
  • Illustrations of potential risk or return are illustrative only and do not necessarily reflect possible actual maximum loss or gain.

MASECO LLP (trading as MASECO Private Wealth and MASECO Institutional) is established as a limited liability partnership under the laws of England and Wales (Companies House No. OC337650) and has its registered office at The Kodak Building, 11 Keeley Street, London, WC2B 4BA.  For your protection and for training and monitoring purposes, calls are usually recorded.

MASECO LLP is authorised and regulated by the Financial Conduct Authority for the conduct of investment business in the UK and is registered with the US Securities and Exchange Commission as a Registered Investment Advisor.