How do I invest when I'm a US citizen in the UK?

HootyOwl

I'm a US dual-citizen living in the UK. I've lived here for a while and I have no plans of going back but I'm also am not keen to give up my citizenship.

I have a small amount to initially invest (£1,000) with regular monthly amounts to follow. Ideally, I'd like to invest in an ISA stocks & shares which requires little manual intervention but the advice on this is mixed as to whether it makes sense as a US citizen.

Help!

colsten

As you'll have to report your worldwide income to the US tax authorities, you might get taxed on tax-free savings / investments. That is, if you manage to get accounts in the first place as quite a few of the banks and investment houses are reluctant to take on US citizens, due to the reporting obligations US Government puts on them.

May be you get a better answer on the Tax board, ask an Accountant, or even ask the IRS as they are the ones who will decide what US tax you pay.

SonOf

The US does not recognise ISAs as being tax free. So, whilst they UK does not take ISAs, the US may still do so if you are a US Citizen.

You will also find the majority of platforms will not accept business from a US citizen. In part because of the issues regarding taxation but also as US citizens are allowed to use US courts against British companies and liability insurers will not cover companies if the individual is a US citizen. So, your selection choice is going to be more limited.

bostonerimus

You must avoid non-US investment funds outside of UK pensions because of the draconian US PFIC tax regulations. If you can find a UK broker wiling to take on a US citizen then individual stocks are ok both US and UK tax wise. But your best option is to invest in a UK workplace pension fund as that wrapper's tax advantages are recognised in the treaty and it avoids PFIC issues. Also UK based savings accounts are ok.

A solution outside of pensions is to use a US based investment firm and buy US registered funds that are also UK reporting.....Vanguard ETFs are an example. So before you left for the UK you should have set that up as it will be difficult to open a US account without a US address.

Ask your question on the tax and money forums at

http://uk-yankee.com