London-based American lawyers, who specialise in tax and immigration, report a threefold increase over the last five years in the number of American citizens who are giving up their citizenship – a process known as “renunciation”.
Across the world 1,781 Americans renounced their citizenship in 2011 compared with just 231 in 2008, when US tax laws changed, although it remains unknown how many are adopting British rather than any other nationality.
Many decide to give up their American citizenship after tiring of the lengthy US tax return process, which requires them to pay tax on their total income regardless of where they live.
“There’s no question that the number of people renouncing their US citizenship is increasing,” said Diane Gelon, a US tax and immigration lawyer based in London.
Even if a US citizen earns all their income in Britain they are liable for tax in their home country which can lead to unusual tax situations arising, said Ms Gelon.
For example, US citizens are expected to pay capital gains tax to the US government if they sell a property in Britain which is their main residence, even though a similar tax is not imposed by the British Inland Revenue.
“It can be an emotional thing, to give up one’s citizenship. I’ve had clients cancelling their appointments at the embassy on the day they were due to renounce because they just couldn’t go through with it.”
Full article: Americans renouncing citizenship to become British thanks to tax rise (The Telegraph)