What Is the Real Cost to Renounce US Citizenship?
The $450 State Department fee is only the start. What renouncing from the UK really costs: getting five years compliant, the final dual-status return, Form 8854, the exit tax for covered expatriates and the tax on later gifts to US family.
The consular appointment is one step; the tax filings before and after it usually cost more than the fee itself.
Written by the US UK Tax Experts team, cross-border tax specialists
Cost to renounce US citizenship: an introduction
The government cost to renounce US citizenship is a $450 State Department fee, down from $2,350 since 13 April 2026. However, the fee is rarely the largest cost. Before the oath, you bring your US filings up to date. Afterwards, you file a final return with Form 8854 and, if you are a covered expatriate, pay an exit tax. For most Americans in Britain, those tax steps decide what renouncing really costs.
This article sets out each cost in turn, from the consular fee to the tax filings. Our guide to IRS Streamlined Filing from the UK explains how to catch up on missed years. That is often the first step.
Why the cost to renounce US citizenship is more than the fee
Renouncing ends your citizenship, but it does not erase past tax obligations. The State Department's renunciation form itself warns that renouncing may not relieve you of US tax obligations. Furthermore, the IRS treats anyone who cannot certify five years of compliance as a covered expatriate. Consequently, the tax side shapes the total far more than the consular fee.
The costs covered in this article
We look at five costs in order. First comes the consular fee. Next come the catch-up returns, the final-year return and Form 8854. Then comes the exit tax, which applies only to covered expatriates. Finally, we look at a cost that falls on your US family later, through the tax on gifts and bequests.
How much is the State Department fee?
The fee is $450. The State Department cut it from $2,350 in a final rule published on 13 March 2026. The cut took effect on 13 April 2026, as the Federal Register notice records.
What the fee pays for
The fee covers the administrative processing of a request for a Certificate of Loss of Nationality. That certificate is the State Department's final decision that you are no longer a US citizen. The US Embassy London page on loss of citizenship describes the fee as non-waivable and non-refundable. It also says the fee is not refunded solely because a request is denied.
When you pay it
In London, you pay the fee at the final interview at the Embassy. At that appointment, you complete the oath and attestations on Form DS-4079 in person. The DS-4079 questionnaire now includes the oath of renunciation and a statement of understanding. Our article on how to renounce US citizenship walks through every step.
The cost of time
Time is a cost too. The Embassy page warns that it may take several months to offer an appointment from the waiting list. After the final interview, the State Department's review may take several months more. Therefore, plan the tax steps around a timeline that can run well beyond a year.
What does it cost to get your US taxes in order first?
You need five years of US tax compliance before you renounce, or you become a covered expatriate automatically. For Americans in Britain who never filed, that usually means catching up first, often through the streamlined procedures.
The five-year certification
Form 8854 asks you to certify five years of US tax compliance. Those are the five years before the year you expatriate. The IRS expatriation tax page lists failing that certification as one of the three covered expatriate tests. Failing it makes you covered even with modest wealth. As a result, the catch-up filings are not optional for anyone hoping to avoid the exit tax.
Catching up through the streamlined procedures
Most people who missed returns through non-wilful conduct use the Streamlined Foreign Offshore Procedures. You file three years of returns and six years of FBARs, and pay any tax and interest. Our article on the Streamlined Foreign Offshore Procedures explains the route. In practice, the tax owed is often small because UK tax is credited.
The relief procedures for former citizens
Some people have already renounced without filing. The IRS relief procedures for certain former citizens may help them. Broadly, your net worth must be under $2 million. In addition, your total tax across the five years before expatriation and the year itself must be $25,000 or less. Your conduct must also have been non-wilful. If you qualify, you file returns for the six years at issue and the IRS will not assert penalties.
What does the final-year filing involve?
In the year you renounce, you file a dual-status return and attach Form 8854. You are a citizen for part of the year and a non-resident for the rest. Each part is taxed on its own rules.
The dual-status return
A dual-status return is a return for a year in which your status changed. You report worldwide income up to the expatriation date, and only US-source income afterwards. The IRS describes the expatriation-year return as a dual-status return that includes Form 1040-NR. Accordingly, income such as UK salary needs splitting by date.
Form 8854 and its penalty
Form 8854 is the initial and annual expatriation statement. The Form 8854 instructions say you attach it to your return for the year that includes your expatriation date. If you fail to file it, you owe a penalty of $10,000, unless the failure is due to reasonable cause. Therefore, missing Form 8854 can cost far more than the consular fee.
FBARs for the final year
You still file an FBAR for the final year if your accounts passed the threshold. It is due if your foreign accounts together exceeded $10,000 at any time in the year, says the IRS FBAR page. After that, the obligation ends unless you remain a US person for another reason.
Will you pay the exit tax?
Only covered expatriates pay the exit tax. Most Americans in Britain with modest wealth who are fully compliant are not covered. For them, the exit tax adds nothing to the cost to renounce US citizenship.
The three covered expatriate tests
You are a covered expatriate if you meet any one of three tests. The first is net worth of $2 million or more on the expatriation date. The second is average annual net income tax over the five prior years above a set figure. Revenue Procedure 2025-32 puts that figure at $211,000 for 2026. The third is failing to certify five years of compliance.
How the exit tax works
The exit tax treats your worldwide property as sold the day before you expatriate. That is the rule in section 877A of the Internal Revenue Code. Gains above an exclusion amount are taxed, and for 2026 the same revenue procedure sets that exclusion at $910,000. Pensions and some deferred items follow separate rules. Our article on the US exit tax explains the detail.
Why compliance changes the answer
The net worth and income tests depend on your wealth and past tax. The certification test depends only on paperwork. Consequently, someone with a London flat and a pension can avoid covered status by getting compliant first. In our experience, this is where careful preparation saves the most.
Is there a cost for your US family later?
Yes, if you are a covered expatriate. US recipients of gifts or bequests from a covered expatriate may owe tax under section 2801. The recipient pays it, not you.
The section 2801 tax
Section 2801 taxes US recipients of covered gifts and bequests from covered expatriates. Final regulations took effect in January 2025, and the IRS now publishes Form 708 instructions for reporting. No filing is needed if covered gifts are at or below the annual exclusion. The instructions put that at $19,000 for 2025 and 2026. Above that, the US recipient may owe tax at the top estate and gift tax rate.
Why it matters for families split across the Atlantic
Many people renouncing from Britain have children or grandchildren in America. If you are covered, gifts to them may be taxed in their hands. Therefore, the true cost to renounce US citizenship can include a cost borne by your heirs. That is another reason to settle covered status before the oath.
Which other costs should you budget for?
Beyond the fee and the tax, budget for preparing the returns, for travel to London and for any US income that continues after you renounce. These items vary widely from person to person.
Preparing the returns
The cost of preparation depends on how many years need filing and how complex your affairs are. A salary and a cash ISA are simple to report. By contrast, UK funds, a company or rental property add forms and work. Therefore, the cost to renounce US citizenship is lowest for people who are already up to date.
Travel and time away
The final interview takes place at the US Embassy in London. The Embassy page notes that cases from Belfast are handled in London too. For people in Scotland, Wales or Northern Ireland, travel and a day away from work add to the cost to renounce US citizenship.
US income after renouncing
Renouncing ends tax on your worldwide income, but not on income from US sources. As a non-resident, you may still owe US tax on items such as US dividends or rent from US property. IRS Publication 519 explains how non-residents are taxed and includes a section on the expatriation tax. Consequently, someone with US investments may keep filing after the oath.
What does the cost to renounce US citizenship look like in practice?
An example shows how the costs add up. It is an illustration, not a real client.
An example: a dual national in Bristol
Consider a typical case. Hannah was born in Ohio, moved to Bristol as a child and holds British citizenship. She has never filed US returns. She has a salary, a workplace pension, a cash ISA and savings. Her net worth is well under $2 million.
Hannah first catches up through the Streamlined Foreign Offshore Procedures, owing a small amount on her ISA income. She then books her Embassy appointment and pays the $450 fee at the final interview. In the year she renounces, she files a dual-status return with Form 8854 and certifies five years of compliance. Because she is not a covered expatriate, no exit tax applies. Her total cost to renounce US citizenship is the fee, the catch-up tax and the cost of preparing the returns.
What would change the picture
Had Hannah skipped the catch-up returns, she could not have certified compliance on Form 8854. She would then have been a covered expatriate despite her modest wealth. As a result, the exit tax rules would have applied to her pension and savings. Order matters: compliance first, oath second.
How US UK Tax Experts can help
We prepare the tax side of renouncing for Americans in the UK. First, we check whether you are compliant for the five years that matter. Next, we prepare any catch-up returns and FBARs, and work out whether you are likely to be a covered expatriate. Finally, we prepare the dual-status return and Form 8854 for the year you renounce.
Our expatriation service covers these filings from start to finish. We also prepare your UK return from the same figures, as our guide to US and UK tax returns prepared together explains. We do not handle the consular process itself, which runs through the Embassy.
Conclusion
In summary, the government cost to renounce US citizenship is a $450 fee, payable at the final Embassy interview. The larger costs are the catch-up returns, the final dual-status return and Form 8854. Missing Form 8854 alone carries a $10,000 penalty. Covered expatriates also face the exit tax, and their US heirs may pay the section 2801 tax. Above all, getting compliant before the oath keeps the cost to renounce US citizenship low.
Contact us
Thinking about renouncing and want to know what the tax side involves? Email us at hello@usuktaxexperts.com, or tell us about your situation through our contact page. We reply within one working day with the filings you would need and what we would ask from you.
Frequently asked questions
The State Department fee is $450 for requests from 13 April 2026, down from $2,350. The larger costs are usually tax filings: catching up on missed returns, the final-year return and Form 8854. Covered expatriates may also pay an exit tax.
No. The US Embassy in London describes the $450 fee as non-waivable and non-refundable. It is not refunded solely because a request for a Certificate of Loss of Nationality is denied.
You are not barred from renouncing, but you must certify five years of compliance on Form 8854. If you cannot, you are a covered expatriate and may owe the exit tax. That makes compliance a key part of the cost to renounce US citizenship.
Only covered expatriates. You are covered if your net worth is $2 million or more, your average annual net income tax for the prior five years exceeds a set figure, or you fail to certify five years of compliance. For 2026, the income tax figure is $211,000.
You owe a $10,000 penalty unless the failure is due to reasonable cause. You are also treated as failing the certification test, which makes you a covered expatriate. Form 8854 is attached to the return for the year you expatriate.
It can if you are a covered expatriate. US recipients of gifts or bequests from a covered expatriate may owe tax under section 2801, reported on Form 708. No filing is needed if covered gifts are at or below the annual exclusion, which is $19,000 for 2026.
