Trump tries to gain international support by tackling double taxation for Americans overseas

Donald Trump has announced his intention to eliminate “double taxation” for Americans living overseas, including those living in the UK, if he wins the upcoming US presidential election. This proposal is part of his broader tax strategy, as he tries to build support from the significant number of US citizens living abroad.

The current US tax system requires all citizens to file tax returns irrespective of where they live – including US persons in the UK. This can lead to complex tax compliance issues and, in some cases, double taxation for those in countries without specific tax treaties with the US. The UK and US do have a tax treaty in place to mitigate double taxation, which we advise on regularly (and will be keeping under review after the 30 October Budget), but the compliance burden is still very high for US persons in the UK. Unfortunately, the treaty does not adequately deal with many common scenarios, especially those that include trusts or LLCs.  In addition, many people are behind with their filings and this can lead to high penalties from the IRS. 

Some people have shown clear scepticism about this proposal, suggesting the move is a last-minute move to gain votes. The overseas vote, including that of US citizens in the UK, is considered influential, and both parties are keen to strengthen their position by securing international support. 

It’s important to note that, as with any legal change in the US, whether this comes to pass would depend upon cooperation with Congress to amend the Tax Code – and of course the details of any changes would only become clear post-election.