Living in the UK does not by itself stop a US citizen from contributing to a Roth IRA. What matters is whether there is taxable compensation on the US return and whether modified adjusted gross income falls within the limits for the filing status used. Salary excluded under the foreign earned income exclusion (opens the official IRS page in a new tab) does not count as compensation, so someone who excludes all their pay may have no room at all, while someone claiming the foreign tax credit (opens the official IRS page in a new tab) keeps their salary in the calculation.
This post is for US citizens and green card holders working in Britain who hold a Roth IRA or are thinking of funding one. It extends our guide to US and UK tax returns for Americans in the UK and covers the compensation rule, the effect of each method of double tax relief, the income limits, married couples where one spouse has no US status, how the treaty treats the account in the UK, and the practical checks before money goes in.
Can you contribute to a Roth IRA while living in the UK
Usually yes, provided two US tests are met. You need taxable compensation for the year, and your modified adjusted gross income must be below the limit for your filing status. Where you live is not one of the tests, and there is no age limit for Roth contributions. The amount allowed is capped at your taxable compensation if that is lower than the annual limit.
IRS Publication 590-A, which covers IRA contributions, says compensation includes wages, salaries, bonuses, professional fees, commissions and net earnings from self-employment. It also lists what is not compensation: rent, interest and dividends, pension and annuity income, deferred pay, and amounts excluded from income, such as foreign earned income and housing costs. A UK salary taxed through PAYE is compensation in the ordinary way, unless it is excluded on the US return.
The annual limit is shared across every IRA you hold. Contributions to a traditional IRA for the same year reduce what can go into a Roth, and Roth contributions are not deductible on Form 1040 (opens the official IRS page in a new tab). A contribution for a year can be made up to the original due date of that year's return, without extensions, which matters for anyone relying on the automatic extension for filers abroad to finish their return.
- UK salary, bonus and commission reported on the US return: compensation
- Net profit from UK self-employment: compensation, after certain deductions
- Interest, dividends, rent and pension income: not compensation
- Earnings excluded on Form 2555: not compensation
Why the foreign earned income exclusion can leave no Roth room
Excluded earnings do not count as compensation. If a UK salary sits wholly within the exclusion, which is capped at $130,000 for 2025, there may be nothing left to support a contribution. Only the part of the salary that stays in US taxable income counts, so the room depends on how much falls above the cap or is not excluded.
Publication 590-A states the point directly in its list of amounts that are not compensation, and it applies to Roth IRAs because the Roth chapter adopts the same definition. The exclusion is claimed on Form 2555 (opens the official IRS page in a new tab), and our page on Form 2555 explains the tests for the tax home and the day count.
The exclusion also does less for the income limit than people expect. Modified adjusted gross income for Roth purposes adds back any amount excluded as foreign earned income or foreign housing, so excluding a salary removes it from compensation without lowering the income figure used for the phase-out. A high earner using the exclusion can therefore lose on both counts.
A contribution made without enough compensation is an excess contribution. Publication 590-A charges an excise tax for each year the excess stays in the account, unless the excess and its earnings are withdrawn by the due date of the return, including extensions. Our post on revoking the foreign earned income exclusion covers the wait that follows if you later change method.
How the foreign tax credit keeps your salary as compensation
With the foreign tax credit, the UK salary stays in US income and the UK tax paid on it reduces the US tax instead. Because the pay is not excluded, it remains taxable compensation for IRA purposes, so a contribution is possible as long as the income limits allow it. This is one of several reasons the credit often suits UK earners.
UK income tax rates are generally higher than US rates, so the credit claimed on Form 1116 commonly removes most or all of the US tax on a UK salary while keeping it on the return. Our post on choosing between the foreign tax credit and the exclusion sets out the wider comparison, and Publication 54 (opens the official IRS page in a new tab) describes both reliefs for taxpayers abroad.
Take a US citizen employed in Manchester who has excluded her salary for several years and has kept a Roth IRA from her time in Chicago. Her return shows no compensation, so she has made no contributions. She moves to the foreign tax credit, her salary now appears in US income, and the UK tax she pays under PAYE is credited against the US tax on it. Her salary sits below the limit for a single filer, so for the first time since leaving she has room to contribute. Before doing so she checks the UK position on contributions, covered below.
Income limits and married filing separately with a non-US spouse
The amount you can put in starts to reduce once modified adjusted gross income passes a threshold set for your filing status, and stops entirely at the top of that range. For a married person filing separately who lived with their spouse at any time in the year, the reduction begins with the first dollar of income, so the room disappears at a very modest income.
That status is the usual one for a US citizen married to someone with no US status, which our post on filing status for Americans married to a Brit explains. Publication 590-A gives separate filers who did not live with their spouse at any time during the year the same range as single filers, but a couple sharing a home in London will not meet that condition.
A couple can instead elect to treat the non-US spouse as a US resident and file jointly. The joint return has a much higher phase-out range, and it opens the spousal IRA rule, which lets a spouse with little or no compensation contribute on the strength of the other spouse's pay. The cost is that the non-US spouse's worldwide income comes into US tax, so the election is weighed across the whole return, not for the Roth alone.
- Single or head of household: the full phase-out range applies
- Married filing jointly: a higher range, and spousal contributions are possible
- Married filing separately, lived together during the year: reduction from the first dollar
- Married filing separately, apart for the whole year: the single filer range
Does the UK tax a Roth IRA's growth and withdrawals
The US-UK treaty generally protects a Roth IRA for a UK resident. The exchange of notes names Roth IRAs among US pension schemes, so growth inside the account is taxed by the UK only when paid out, and a payment that would be exempt in the US for a US resident is exempt in the UK too.
The text is in the 2001 convention as amended by the 2002 protocol, published on GOV.UK as USA: tax treaties (opens the official GOV.UK page in a new tab) and in the IRS treaty documents (opens the official IRS page in a new tab). Article 3 defines a pension scheme, and the exchange of notes agreed alongside it lists individual retirement accounts and Roth IRAs under section 408A as US schemes. Article 18(1) says income earned by a pension scheme in one country is taxed as income of a member resident in the other country only when, and to the extent that, it is paid to that member.
Article 17(1)(b) supplies the matching exemption on withdrawal. A qualified Roth distribution is tax-free in the US, with conditions set out in IRS guidance, so a qualified withdrawal paid to a UK resident should be exempt in the UK to the same extent. A non-qualified withdrawal may be taxable in the US in part, and the UK exemption follows the same measure. Article 17(2) deals separately with lump sums and is a point to review before a large single withdrawal. Our summary of the US-UK tax treaty lists the other articles.
- Article 3 and the exchange of notes: Roth IRAs are treated as US pension schemes
- Article 18(1): income inside the account is taxed in the UK only when paid out
- Article 17(1)(b): a payment exempt in the US for a US resident is exempt in the UK
- Article 17(2): lump sums follow a separate rule worth checking in advance
Should you keep contributing once you are UK resident
That is less settled than the treatment of the account itself. The treaty and the exchange of notes describe Roth IRAs without saying anything about contributions made after the holder becomes UK resident, and we have not found published HMRC guidance that addresses it.
Because the primary sources are silent, the safest reading is that the treaty protection is clear for an account funded before arrival and less certain for money added during UK residence. Anyone who wants to keep contributing should weigh the US benefit against that uncertainty and take advice before the money goes in, since a contribution left in the account past the correction deadline is difficult to reverse. Our US-UK pensions work covers this alongside UK workplace schemes.
There is also a practical hurdle. Some US brokerages restrict accounts held by customers with a non-US address, which can limit new contributions or trading even where the tax rules allow them. Check the provider's terms before moving, and keep the US address on file accurate. Our individual tax returns and treaty relief services handle the reporting each year, and the guide for Americans in the UK covers the rest of the annual filing.
General information, not advice. The right answer depends on your circumstances and the tax year concerned.
