This guide is for investors with accounts in both the UK and the US, especially Americans living in Britain, who have to report the same dividends and share sales to HMRC and to the IRS. The short answer is that each country wants its own calculation, in its own currency, over its own tax year and with its own rules for which shares were sold, so one set of broker statements rarely produces both returns without extra work.
What does an investor with US and UK accounts have to report, and to whom?
A UK resident reports worldwide investment income and gains to HMRC through Self Assessment. A US citizen or green-card holder also reports worldwide income to the IRS, wherever they live[22], and discloses non-US accounts to the US Treasury. A UK resident who is not a US person generally has no US return to file for portfolio investments; US tax is settled through withholding.
The two systems do not line up: the UK tax year runs from 6 April to 5 April and the US year is the calendar year; the UK computes in sterling, the US in dollars; and each has its own forms, deadlines and share identification rules.
| What | UK (HMRC) | US (IRS and FinCEN) |
|---|---|---|
| Main return | Self Assessment (SA100) | Form 1040 |
| Dividends and interest | Main return for UK income; foreign pages (SA106) for non-UK income[9] | Schedule B; Forms 1099-DIV/INT where issued |
| Share sales | Capital gains summary (SA108) with computations | Form 8949 and Schedule D[17] |
| Relief for the other country’s tax | Foreign tax credit relief, claimed on SA106[10] | Foreign tax credit, usually Form 1116[21] |
| Non-US funds | Offshore fund income on SA106[11] | Form 8621 for PFICs[28] |
| Account disclosure | None separate | FBAR (FinCEN 114) and Form 8938 |
| Deadline | Date |
|---|---|
| US return and payment (interest runs from here) | 15 April 2026 |
| FBAR (automatic extension to 15 October 2026) | 15 April 2026 |
| US return for citizens living abroad (automatic 2-month extension) | 15 June 2026 |
| UK second payment on account | 31 July 2026 |
| Register for Self Assessment if new | 5 October 2026 |
| UK paper return | 31 October 2026 |
| UK online return and balancing payment | 31 January 2027 |
Sources for dates: HMRC[14]; IRS[23][24]. Further time to file a US return beyond June is available on request, but interest on unpaid tax still runs from April. Because the UK year straddles two US years, UK tax paid for 2025/26 relates partly to US 2025 and partly to US 2026, and foreign tax credits have to be matched to the right US year. That is one of the main reasons cross-border returns take time. How the two systems interact more broadly is covered in Americans living in the UK: how both tax systems apply, and choosing accounts and funds in Investing across US and UK markets.
How does UK capital gains tax decide which shares you sold?
The UK does not let you choose. When you sell shares of one class in one company, the sale is matched first with shares bought on the same day, then with shares bought in the 30 days after the sale (if you were UK resident when you bought them), and then with the “section 104 holding”, a single pool of all other shares at their average cost[1]. These rules have applied to individuals since 6 April 2008 and are in sections 104, 105 and 106A of the Taxation of Chargeable Gains Act 1992[2].
The 30-day rule, often called the “bed and breakfast” rule, stops investors selling to crystallise a gain or loss and immediately buying back. If you sell and repurchase within 30 days, the sale is matched with the repurchase, not with the pool, so the gain or loss is usually small[2].
The pool is kept in sterling. Each purchase adds its sterling cost, converted at that day’s exchange rate, and each sale removes a proportionate share of the pooled cost. For a US person, this pool is a separate record from anything their broker produces, because US brokers report lot by lot, in dollars.
Gains above the £3,000 annual exempt amount are taxed at 18% where they fall within the basic-rate band and 24% above it[6][7]. Even if no tax is due, a person in Self Assessment must report gains when total proceeds from disposals in the year exceed £50,000[8]. Proceeds, not gains: an active investor selling £60,000 of shares at no profit still has to complete the capital gains pages.
How does the US decide which shares you sold?
The US lets you choose, within rules. If you adequately identify which lots you are selling, usually by instructing your broker at the time of sale, those lots are used. Otherwise the shares bought first are treated as sold first (FIFO)[16]. Gains on shares held for more than one year are long-term and taxed at the lower long-term rates[16].
The US wash sale rule looks similar to the UK’s 30-day rule but works differently. If you sell at a loss and buy “substantially identical” securities within 30 days before or after the sale, the loss is disallowed for now and added to the cost of the replacement shares[16]. It is reported on Form 8949 with code W[17]. It only affects losses, and it looks backwards as well as forwards. The UK rule affects gains and losses, and looks forwards only.
| Question | UK (CGT) | US (federal income tax) |
|---|---|---|
| Can you choose which shares you sold? | No: statutory matching order | Yes, by specific identification; otherwise FIFO |
| Cost basis method | Section 104 pool at average cost, in sterling | Lot by lot, in dollars |
| Rule on buying back | Sale matched to purchases in the following 30 days; affects gains and losses | Wash sale: losses disallowed if substantially identical shares bought 30 days before or after |
| Holding period effect | None: one set of rates | More than one year gives long-term rates |
| Currency | Sterling at each transaction date | Dollars at each transaction date |
Because the rules differ, the same sale can use different shares, different costs and different dates in each country. A US person who uses specific identification to sell high-cost lots and harvest a US loss may still show a UK gain, because the UK looks at the average cost of the whole pool.
Which exchange rate do HMRC and the IRS expect?
Both countries use the rate on the date of each transaction. HMRC measures a purchase or sale at “the sterling worth, at the date of the acquisition or disposal”[3], and asks for foreign income to be converted “using the exchange rate at the time the income arose”[9]. The IRS says to use the exchange rate prevailing when you receive, pay or accrue the item[18].
Both publish reference rates. The IRS publishes yearly averages; for 2025 its figure was 0.759 pounds per dollar[19], but its general instruction remains the spot rate. HMRC’s monthly, average and spot rates, originally published for customs and VAT, now sit on the Trade Tariff service[31]. Whatever source is used, apply it consistently and keep a note of it.
Currency itself can create a separate gain or loss:
- UK. Since 6 April 2012, gains and losses on foreign currency bank accounts held by individuals are not chargeable[4]. Dollars held in a bank account can move in value against sterling without a UK tax event.
- US. For a US person, pounds are foreign currency. A gain on converting them back to dollars is taxable, but for personal transactions a gain of $200 or less per transaction is ignored[20]. Investment transactions are not personal, so currency gains in a UK brokerage cash account can be reportable. Sterling mortgages raise a similar issue on repayment.
- FBAR and Form 8938. Account values are converted at the Treasury rate for the last day of the year, not at transaction rates[25][26].
Worked example: one sale, a gain in dollars and a loss in sterling (illustrative arithmetic)
A fictional UK-resident US citizen buys 100 shares in a US company at $100 each ($10,000) when £1 = $1.25, and later sells them all at $110 each ($11,000). They own no other shares in that company and bought none within 30 days of the sale. Dealing costs are ignored. These figures are our own arithmetic to show the mechanism, not output from Edale’s planner, and the exchange rates are chosen for illustration.
| US result (dollars) | UK result if £1 = $1.40 at sale | UK result if £1 = $1.10 at sale | |
|---|---|---|---|
| Proceeds | $11,000 | £7,857 | £10,000 |
| Cost (at £1 = $1.25) | $10,000 | £8,000 | £8,000 |
| Gain or loss | $1,000 gain | £143 loss | £2,000 gain |
The share price rose 10% in dollars in each case. When sterling strengthened from $1.25 to $1.40, the dollar proceeds bought fewer pounds, so the UK sees a small loss while the US sees a $1,000 gain. When sterling weakened to $1.10, the UK gain of £2,000 is worth about $2,200, more than twice the US gain.
This matters for double tax relief. In the first case the US taxes a gain the UK does not recognise, so there is no UK tax to credit against the US liability. In the second, if the £3,000 annual exempt amount has already been used on other gains, UK tax on £2,000 is set against US tax on $1,000, and the excess UK tax may not be usable in that US year. Because the UK tax year runs to 5 April, the gain may also fall in a different US year from the one the UK tax relates to. The actual outcome depends on the person’s income, allowances, losses and treaty position. This is general information, not a basis for decisions without advice.
How are dividends and interest reported in each country?
In the UK, foreign dividends and interest go on the foreign pages (SA106), converted to sterling at the rate when received[9]. Credit for US tax withheld is limited to the treaty rate and to the UK tax on that income[9][10]. In the US, a US person reports all dividends and interest, UK and US, on the 1040, and claims a foreign tax credit for UK tax.
For UK tax, dividends are taxed at 10.75%, 35.75% or 39.35% for 2026/27 after the £500 dividend allowance[13]. If more US tax was withheld than the 15% treaty rate, for example because no Form W-8BEN was in place, the UK credit is restricted to the treaty rate and the excess has to be reclaimed from the IRS[9].
For US tax, dividends from UK companies can be qualified dividends because the UK treaty is on the IRS approved list[33]; US brokers classify dividends on Form 1099-DIV, while a UK broker’s statements leave that classification to you. The foreign tax credit cannot exceed the US tax on foreign-source income, and tax refundable under a treaty is not creditable[21]. Where total creditable foreign tax is $300 or less ($600 for joint filers) and all of it is on passive income reported on payee statements, the credit can be claimed without Form 1116[21].
US citizens resident in the UK have an extra layer. Article 24(6) of the US–UK treaty says the UK need only credit the US tax that the US could charge a UK resident who is not a US citizen, and the US then credits the UK tax remaining after that credit[30]. On US-source dividends, the UK credits 15% and the US credits the UK tax above that. Getting this order right is essential to avoid paying tax twice.
How are accumulation funds and excess reportable income taxed?
UK tax is due on income a fund earns for you even if it is reinvested rather than paid out. For UK accumulation units, the reinvested income is taxed as a distribution and then added to your CGT base cost[5]. For offshore reporting funds, any excess of reported income over distributions is taxed as received on the “fund distribution date”, six months after the end of the fund’s reporting period, and the same amount is deducted when working out the capital gain[11][12].
Three practical points follow. First, excess reportable income may not appear on a broker statement; it is published by the fund in its report to investors, and investors have to pick it up themselves. Second, where a reporting fund is more than 60% invested in interest-bearing assets, its distributions and reported income are treated as interest, not dividends[9][11]. Third, forgetting to add accumulated or reported income to base cost leads to paying CGT on the same money again when the fund is sold.
For a US person, most such funds are also PFICs, which have their own annual reporting on Form 8621 and do not follow UK timing[28]. The PFIC rules are covered in ISAs, UK funds and PFIC rules for Americans.
What changes when your broker is not American?
A non-US broker does not issue Forms 1099. A US person with a UK account must work out dollar gains, income and foreign tax themselves or with a preparer. Sales with no Form 1099-B go on Form 8949 with box C (short-term) or box F (long-term)[17].
The reverse is also true. A US broker’s Form 1099-B shows lot-by-lot dollar results, not the sterling section 104 computation HMRC needs. A UK resident with a US account needs a separate sterling record of every purchase and sale, converted at each date. Where 1099-B shows basis was reported to the IRS and no adjustments are needed, totals can go straight onto Schedule D without listing each sale on Form 8949[17]. That simplification does not apply to the UK return.
Two further points. A non-US broker’s cash balance in dollars or pounds can create US currency gains, as above. And UK or Irish funds bought through a non-US broker may need Form 8621 even when no sale happens.
When do FBAR and Form 8938 apply?
A US person must file an FBAR if the combined value of their non-US financial accounts exceeded $10,000 at any time in the calendar year. It is filed electronically with FinCEN, not with the tax return[24]. Form 8938 is filed with the tax return, and for those living abroad applies above $200,000 at year-end or $300,000 at any time (single), or double for joint filers[26].
| FBAR (FinCEN 114) | Form 8938 | |
|---|---|---|
| Threshold | Aggregate over $10,000 at any time | Living abroad: single $200,000 end of year / $300,000 any time; joint $400,000 / $600,000. Living in the US: single $50,000 / $75,000; joint $100,000 / $150,000 |
| Filed with | FinCEN BSA E-Filing, separately | With Form 1040 |
| Due | 15 April; automatic extension to 15 October | With the return, including extensions |
| Exchange rate | Treasury rate for the last day of the year; round up to the next dollar | Treasury rate for the last day of the tax year |
| Penalty for failure to file | Civil penalties, adjusted annually | Up to $10,000, plus up to $50,000 more after IRS notice |
Sources: IRS and FinCEN[24][25][26][27]. The “living abroad” thresholds apply to those who meet the bona fide residence test for a full tax year or the 330-day physical presence test[26]. Assets reported on Form 8621 need not be listed again on Form 8938, but they still count towards the threshold[26]. Many UK-resident Americans need both forms, because an ISA, a UK brokerage account and UK bank accounts quickly pass $10,000 together.
What records should you keep, and for how long?
For UK Self Assessment, HMRC asks you to keep records for at least 22 months after the end of the tax year if you file on time[15]. The IRS generally expects three years, six if income was under-reported by more than 25%, and property records until the limitation period ends for the year you sell[29]. FBAR records must be kept for five years from the FBAR due date[24].
In practice, the minimums are too short for investments. A section 104 pool can hold shares bought over decades, and you will need the sterling cost of each purchase when you finally sell. Useful records include:
- contract notes for every purchase and sale, with the date and the currency;
- the exchange rate used for each transaction and its source;
- dividend and interest statements showing foreign tax withheld, and any Form W-8BEN or W-9 held by each provider;
- fund reports showing excess reportable income and accumulation amounts, year by year;
- year-end and maximum account values for FBAR and Form 8938;
- copies of both countries’ returns, with the foreign tax credit workings that connect them.
New UK residents who claim the four-year foreign income and gains regime, available since 6 April 2025 to people who were not UK resident for the previous ten years, still need to identify and quantify the foreign income and gains they claim relief on, and they give up the personal allowance and CGT annual exempt amount for that year[32]. The records above are still needed.
How the Edale Wealth Hub helps
The Wealth Hub does not prepare tax returns and does not file forms with HMRC, the IRS or FinCEN. What it does is make the raw material clearer and more complete, so the return preparer on each side starts from the same figures.
- Tax boxes in My Investments. For accounts the adviser has linked (currently Interactive Brokers UK and US accounts), clients see capital gains, dividends and interest year to date in both sterling and dollars, each converted at the transaction’s own date. Sterling gains are shown as a guide: UK CGT depends on share pooling and the matching rules described above.
- US tax summary. A “1099-style summary, not a Form 1099” maps dividends and interest to 1099-DIV and 1099-INT categories, shows foreign tax, lists Form 8949 detail with CSV export, flags holdings that may be PFICs, and shows retirement-account withdrawals separately in 1099-R style.
- Income records. Income received is shown net of tax withheld and split between taxable and tax-advantaged accounts; pension and IRA withdrawals are shown gross, with tax withheld and the amount paid out. A one-page PDF summary can be downloaded.
- Tax Records. Advisers record US Roth conversions and US pension withdrawals, and clients can view them, so these events are not lost between years.
- Secure document storage and messaging keep statements, fund reports and correspondence with the adviser in one place.
The limits matter. My Investments covers linked Interactive Brokers accounts only, so holdings elsewhere need their own records. The summaries are for sharing with an accountant or tax preparer; they are not returns, IRS forms or a substitute for professional preparation, and Edale is not a US tax-return preparer. If you would like to see how this would work for your accounts, arrange a conversation.
Frequently asked questions
Do I use FIFO for UK capital gains tax?
No. UK CGT matches a sale first with shares bought the same day, then with shares bought in the following 30 days, then with the section 104 pool at average cost. You cannot choose which shares you sold. The US default is FIFO unless you specifically identify the shares sold.
Which exchange rate should I use for my UK tax return?
HMRC measures purchases and sales at their sterling value on the date of each transaction, and asks for foreign income to be converted at the rate when it arose. Use a reliable published rate consistently and keep a note of the source. Year-end or average rates are not a substitute for transaction-date rates on share sales.
Can a sale be a gain in the US and a loss in the UK?
Yes. The US measures the gain in dollars and the UK in sterling, each converted at the transaction dates. If sterling strengthens between purchase and sale, a dollar gain can become a sterling loss; if sterling weakens, the sterling gain can be larger. The two countries’ share identification rules can also pick different shares.
Do I have to report share sales to HMRC if I made no gain?
If you are in Self Assessment, you must report your gains if the total proceeds from disposals in the tax year were more than £50,000, even if the gains are within the £3,000 annual exempt amount or you made losses. Reporting losses also preserves them for use against future gains.
What is excess reportable income?
It is income an offshore reporting fund has earned for you but not paid out. You are taxed on it as if received six months after the end of the fund’s reporting period, even though no cash arrives. The same amount is added to your base cost, so it is not taxed again as a gain.
Does my UK broker send me a Form 1099?
Generally no. Forms 1099 are issued by US payers. A US person with a UK account works out dollar income, gains and foreign tax from statements and contract notes, and reports sales without a 1099-B on Form 8949 with box C or F. UK accounts also count towards FBAR and Form 8938 thresholds.
Do I need both an FBAR and Form 8938?
Often, yes. An FBAR is needed if non-US accounts together exceed $10,000 at any time in the year. Form 8938 has higher thresholds, starting at $200,000 at year-end for a single filer living abroad. The two overlap but are separate filings with different recipients, and one does not replace the other.
Sources
- HMRC — HS284 Shares and Capital Gains Tax (2025) (accessed September 2026)
- HMRC — Capital Gains Manual CG51560: share identification rules from 6 April 2008 (accessed September 2026)
- HMRC — Capital Gains Manual CG78310: assets acquired or sold for foreign currency (accessed September 2026)
- HMRC — Capital Gains Manual CG78320: foreign currency bank accounts (accessed September 2026)
- HMRC — Capital Gains Manual CG57707: unit trusts, accumulation units (accessed September 2026)
- GOV.UK — Capital Gains Tax: allowances (accessed September 2026)
- GOV.UK — Capital Gains Tax: rates (accessed September 2026)
- GOV.UK — Capital Gains Tax: work out if you need to pay (accessed September 2026)
- HMRC — Foreign notes (SA106 Notes) 2025–26 (accessed September 2026)
- HMRC — HS263 Relief for foreign tax paid (2026) (accessed September 2026)
- HMRC — HS265 Offshore funds (accessed September 2026)
- HMRC — Investment Funds Manual IFM13326: reporting funds, reported income (accessed September 2026)
- GOV.UK — Tax on dividends (accessed September 2026)
- GOV.UK — Self Assessment tax returns: deadlines (accessed September 2026)
- GOV.UK — How long to keep your records (accessed September 2026)
- IRS — Publication 550, Investment income and expenses (accessed September 2026)
- IRS — Instructions for Form 8949 (accessed September 2026)
- IRS — Foreign currency and currency exchange rates (accessed September 2026)
- IRS — Yearly average currency exchange rates (accessed September 2026)
- US Code — 26 USC 988, Treatment of certain foreign currency transactions (accessed September 2026)
- IRS — Publication 514, Foreign tax credit for individuals (accessed September 2026)
- IRS — Publication 54, Tax guide for US citizens and resident aliens abroad (accessed September 2026)
- IRS — US citizens and resident aliens abroad: automatic 2-month extension (accessed September 2026)
- IRS — Report of Foreign Bank and Financial Accounts (FBAR) (accessed September 2026)
- FinCEN — Reporting maximum account value (accessed September 2026)
- IRS — Instructions for Form 8938 (accessed September 2026)
- IRS — Comparison of Form 8938 and FBAR requirements (accessed September 2026)
- IRS — Instructions for Form 8621 (accessed September 2026)
- IRS — How long should I keep records? (accessed September 2026)
- US Treasury — US–UK income tax convention (2001), Article 24 (accessed September 2026)
- HMRC — Exchange rates (now published on the Trade Tariff service) (accessed September 2026)
- HMRC — Check if you can claim the 4-year foreign income and gains regime (accessed September 2026)
- IRS — Notice 2024-11: treaties meeting the requirements of section 1(h)(11)(C)(i)(II) (accessed September 2026)