Americans accounted for 30% of London home sales above £15 million in the first half of 2026, up from 20% at the end of 2025, according to the agency Beauchamp Estates. LonRes also reports a broad consensus among prime central London agents that US buyers are more prominent. The exchange rate is not doing the work: on 27 October the pound bought $1.33, almost exactly where it stood a year earlier.
A London home is a sound purchase for many American families, but the UK and US tax systems interact in ways that are not obvious, and the most expensive surprises tend to come years after completion. The Budget on 28 October left the UK rates below unchanged.
Stamp duty: two surcharges
Stamp Duty Land Tax on a home in England runs from 0% to 12% across five bands. Two surcharges apply on top. A buyer who will own another home worth £40,000 or more anywhere in the world pays an extra 5%, so an American who keeps a house in the United States will usually pay it. A buyer who has not been in the UK for at least 183 days in the 12 months before the purchase pays a further 2%.
On a £3 million home, the standard charge is £273,750. A non-resident buying their only home pays £333,750, about 11.1% of the price; a non-resident who also owns a home elsewhere pays £483,750, about 16.1%. The 2% surcharge can be reclaimed if every buyer then spends 183 days in the UK within a continuous 365-day period running from up to 364 days before completion to 365 days after it. The claim must be made within two years of completion.
Inheritance tax: the point most often missed
A home in London is a UK asset, and UK inheritance tax applies to UK assets whatever the owner's nationality or residence. Above a nil-rate band of £325,000, the rate is 40%.
Many American buyers assume that the 1978 estate tax treaty between the two countries protects them. The treaty allocates the right to tax: the UK may tax real property situated in the UK, and the United States then gives a credit for the UK tax against US estate tax. In 2026, however, the US federal estate tax exemption is $15 million. For an estate below that level, there is no US estate tax for the credit to reduce, so the treaty does not remove the UK charge.
The spouse exemption also needs care. Where one spouse becomes a long-term UK resident and the other does not, the exemption on assets passing between them is limited to £325,000, unless the other spouse elects to be treated as a long-term UK resident, an election with consequences of its own.
Selling: UK tax and US tax, in two currencies
A non-resident who sells a UK home must report the sale to HMRC within 60 days of completion, even if no tax is due or the sale makes a loss. Gains are taxed at 18% or 24%.
The US side is calculated in dollars. The exclusion for gains on a main home, up to $250,000 or $500,000 for a married couple filing jointly, applies to the gain measured in dollars, so currency movements can create or remove a taxable gain. A sterling mortgage adds a further complication: US tax advisers point out that if the pound has fallen by the time a sterling mortgage is repaid, the dollar gain on the debt is taxed as ordinary income and is not covered by the home sale exclusion.
Gains above the exclusion may also attract the 3.8% net investment income tax. The IRS position is that foreign tax credits cannot reduce it, and in August 2026 a US federal appeals court rejected attempts to use the Canadian and French treaties to do so. The UK treaty was not before the court, so the position for British tax paid is not settled by that decision, but buyers should not assume UK tax will offset it.
Before exchanging contracts
- Take advice from someone who works across both the UK and US systems, before the purchase rather than at the point of sale.
- Decide how the home will be owned and in which names, with inheritance tax and the spouse exemption in mind.
- Think about the currency of any mortgage, not just its rate.
- Make or update a will that works in both countries.
- Keep a record of travel days if you may qualify for a refund of the 2% surcharge.
None of this is tax or legal advice; it is a summary of rules that apply differently to every family.
Dolce Vita handles sales and lettings across the UK from Mayfair, and helps clients buy abroad through partner agencies. If you already own a home in the UK and are considering a sale or a let, Request a valuation; we acknowledge the same working day and return a written valuation within 24 to 48 hours.
Chris Dawson, Co-Founder
Sources: Beauchamp Estates, mid-year Billionaire Buyers survey 2026 (via PropertyWire, 21 July 2026). LonRes, prime central London buyer profile, 24 February 2026. Bank of England, daily spot exchange rates, 27 October 2026 and 27 October 2025. gov.uk, "Stamp Duty Land Tax: residential property rates", "Higher rates of Stamp Duty Land Tax" (updated 1 April 2025) and "Apply for a repayment of the non-UK resident Stamp Duty Land Tax surcharge". gov.uk, "Inheritance Tax" and "When someone living outside the UK dies". HMRC, Inheritance Tax Manual IHTM47030 and IHTM47031, updated 7 April 2026. UK and US Estate and Gift Tax Convention 1978, articles 6 and 9 (SI 1979/1454, legislation.gov.uk). IRS, "What's new: estate and gift tax", updated 23 July 2026. HMRC, helpsheet HS307 (2026), updated 6 April 2026. IRS Publication 523. Greenback Tax Services, "Section 988 currency gain on foreign property", 29 April 2026. IRS, "Questions and answers on the net investment income tax", updated 14 September 2026. Grant Thornton, "Federal Circuit rejects treaty-based FTC against NIIT", 22 September 2026. HM Treasury, Budget 2026: overview of tax legislation and rates, Annex A, 28 October 2026.