How do I renounce my US citizenship in the UK?

Renouncing US citizenship means formally relinquishing your nationality through a legal process. This decision is irreversible; some common motivations include avoiding complex US tax obligations, political disagreements, or wanting to integrate fully into life in another country.

You must be an adult with citizenship in another country and be up-to-date on U.S. taxes. It’s essential to understand the consequences of your decision entirely.

You should already possess citizenship in another country, as the U.S. government aims to prevent statelessness. Holding another citizenship before renouncing your U.S. citizenship ensures you have the legal rights and protections of a citizen in another country.

Renouncing your U.S. citizenship is a complex and irreversible process. It’s essential to understand the legal and tax implications thoroughly. Consulting with a tax professional or legal advisor specializing in citizenship can provide personalized guidance and help navigate this significant decision.

• Schedule an Appointment: Contact the London U.S. Embassy or Belfast Consulate to schedule an appointment for renunciation.

• Complete Necessary Forms:

• • Fill out Form DS-4079 (Request for Determination of Possible Loss of United States Citizenship).
  • Complete Form DS-4080 (Oath of Renunciation of the Nationality of the United States).
  • Don’t sign the forms until you’re in the presence of an officer during your interview.

• Attend the Interview:

• • Go to your scheduled interview at the U.S. Embassy or Consulate.

• • Discuss your reasons for renouncing citizenship and understand the consequences with a consular officer.

• Pay the Renunciation Fee: A fee must be paid for processing the renunciation and paid during the interview. The fee is currently US$2,350, but it used to be $450, and it’s currently under review at the time of this article’s publication.

• Take the Oath of Renunciation:

• • Formally renounce your citizenship by taking the Oath of Renunciation.
  • This step is irreversible, so ensure you are fully committed to this decision.

• Final Tax Responsibilities:

• • Get specific US tax advice to check if you’re a covered or non-covered expatriate.
  • File your final dual-status tax return (Form 8854) with the IRS.
  • Settle any outstanding tax obligations.
    
• Receive Certificate of Loss of Nationality: After attending the embassy, you will receive a Certificate of Loss of Nationality, confirming your renunciation, which is also required to finalize US taxes.

No, but it’s a good idea to start your US tax compliance journey while waiting for your embassy appointment. Gathering all the documents and statements to prepare multiple years of US tax returns can take time.

It’s highly advisable to speak with a US renunciation specialist, so you’re fully aware of your US tax situation.

The financial implications primarily involve tax obligations and the potential imposition of an Exit Tax. Here’s a more detailed look at what this entails:

• Up-to-date Tax Obligations: There are two parts to giving up US citizenship. The first is to attend a renunciation interview at a US embassy or consulate, as discussed. The second is to exit the US tax system. You must ensure all your tax affairs are in order. This includes filing your final tax return and settling any outstanding taxes with the IRS.
• You’ll need to have your last five years of tax returns filed with the IRS in addition to the year you renounce.
• Complying with all tax obligations is crucial to safely exiting the US tax system, without delay or penalty.

Generally, a Covered Expatriate will have to pay Exit Tax. A non-covered expat does not.
If you fail any of the following rules, you’ll be deemed a Covered Expatriate, and Exit Tax may apply to you.

To determine your status, you must assess your situation against three criteria:

• Net Worth Test: If your net worth is $2 million or more on the day of your expatriation, you are considered a covered expatriate.
• Tax Liability Test: This test looks at your average annual net income tax for the five years ending before the date of expatriation. Your average annual net income tax liability for the 5 tax years ending before the date of expatriation is more than US$180,000 (for tax year 2023)
• Certification Test: You must certify on Form 8854 that you have complied with all U.S. federal tax obligations for the five years preceding the year of expatriation. Failure to do so, regardless of your net worth or tax liability, results in covered expatriate status.

Being a covered expatriate has significant implications. The Exit Tax is calculated as if you sold all your assets at their fair market value the day before expatriating. This “mark-to-market” regime can lead to a substantial tax bill, even if you haven’t realized any gains in the traditional sense. It also includes deferred compensation items, specified tax-deferred accounts, and non-grantor trusts.

In contrast, non-covered expatriates do not face these taxing provisions. They can renounce their citizenship without the immediate tax consequences imposed on covered expatriates. However, they must still settle any outstanding U.S. tax liabilities up to the point of expatriation.

Here are the key points:

• Exit Tax: (or expatriation tax), is a critical financial aspect to consider. This tax applies if you meet any of the following criteria:
  • Your net worth is $2 million or more on the date of expatriation.
  • Your average annual net income tax for the five years ending before the date of expatriation is less than US$180,000 (TY 2023).
  • You fail to certify on Form 8854 that you have complied with all U.S. federal tax obligations for the five years preceding the date of your expatriation.

• Calculating Exit Tax: If you are subject to Exit Tax, it is calculated based on the fair market value of your worldwide assets as if you had sold them for their fair market value the day before your renunciation. This includes everything from real estate to stocks and other investments.
• Form 8854 – Initial and Annual Expatriation Statement: You must file Form 8854 with the IRS to provide information on your assets and certify compliance with U.S. tax laws for the past five years. This form is crucial for determining your liability for the Exit Tax.
• Potential Tax on Deferred Compensation Items: If you have certain deferred compensation items, such as pensions or stock options, these may be taxed differently upon expatriation.
• State Tax Obligations: In addition to federal taxes, consider any state tax obligations. Some states may continue to tax expatriates under certain conditions.

Given the complexity and potential financial impact of renouncing U.S. citizenship, consulting with a tax professional or legal advisor is highly advisable. They can provide personalized guidance and help ensure you meet all requirements and understand the full scope of your financial obligations.

Preparing for your renunciation appointment involves gathering the necessary documents and mentally readying yourself for the interview. You’ll need to bring:

• Evidence of U.S. citizenship (such as your most recent U.S. passport or U.S. birth certificate, if you are not in possession of a U.S. passport)
• U.S. Consular Report of Birth Abroad, if applicable
• Bio-pages of all current foreign passports
• Certificates of Naturalization for any country, including the United States, if applicable
• Certificates of Citizenship for any country, including the United States, if applicable
• Evidence of any name changes, if applicable (for example, your marriage or divorce certificates, court orders, or deed polls)
• Completed form DS-4079
• Completed Loss of Citizenship Questionnaire
• Completed Informal Loss of Citizenship Acknowledgement, which must be signed/dated and sent as a scanned document.

Immediately, you lose rights and privileges like living and working in the U.S., and protection from U.S. embassies and consulates. Depending on your financial situation, you’ll also need to settle any outstanding taxes and might face the Exit Tax.

Yes, but you’ll need an ESTA visa like any other British citizen. The Electronic System for Travel Authorization is a requirement for all British citizens under the Visa Waiver Program. It allows you to stay in the U.S. for up to 90 days for tourism or business purposes. Remember, renouncing your U.S. citizenship changes your entry requirements, so it’s crucial to ensure your ESTA is approved before your travel. This process is relatively straightforward but requires attention to detail to avoid any travel disruptions.

Renouncing US citizenship does NOT remove your Social Security entitlement. If you have accumulated enough credits, typically 40 quarters of work in the U.S., you remain entitled to these benefits. However, the payment of these benefits can be subject to specific rules depending on your new country of residence. For instance, non-U.S. citizens residing outside the United States may face certain restrictions or additional requirements. It’s important to understand that while your entitlement remains, the process of claiming these benefits might differ. Consulting with a financial advisor or a tax professional who specializes in expatriate affairs can provide clarity and ensure you receive the benefits you’re entitled to.

After you’ve renounced your U.S. citizenship, there are several tasks to handle:

• Certificate of Loss of Nationality: You’ll receive this document as official proof of your renunciation.
• Visa and Residency: As a non-U.S. citizen, you’ll need appropriate visas for any future travel to the U.S.
• Financial Planning: Reassess your financial plans with a professional tax advisor, especially regarding pensions, investments, and banking, to align with your new citizenship status.
• Social and Cultural Adaptation: Embrace the local culture and community in the UK by building new networks and relationships.

The journey after renouncing U.S. citizenship involves careful consideration of legal, financial, and personal aspects. It’s advisable to seek guidance from a tax professional or legal advisor to navigate these complexities. They can offer tailored advice to ensure a smooth transition into your new life as a non-U.S. citizen.