UK/USA Dual Citizen - S&S ISA Application Issue

williamcroome

Hi,

I was born in UK, lived in UK all my life, have UK nationality and passport, but I also have a US passport. I don't have social security number and haven't lived or worked in US for any time. 

Recently I wanted to apply for an S&S ISA and I have found that they all ask the question/declare - if you have US Citizenship you can't apply. 

Is this the case for me? I don't see how that can be correct that I can't get an ISA when I have paid UK tax all my life and have no financial ties to the US. Am I misunderstanding my status.

When I search I see lots of scary articles about how I should be filling in my US tax returns....should I be looking into this...what world of pain awaits me. 

Thanks for any advice.

Alexland

Yes many UK providers have made the business decision that they don't want the additional regulatory and reporting overhead associated with providing financial services to US citizens. If you are a US citizen then you should make effort to understanding your US tax position and reporting requirements as they may apply to transactions you perform while living your life in the UK.

dunstonh

There are several reasons why US citizens are excluded by most providers
1 - Liability - US Citizens can use the US courts against British companies. 
2 - FATCA reporting
3 - US Citizens are still captured under US tax.  The US does not recognise most of the UK tax wrappers (such as ISA - so that would be tax free under UK taxation but taxable under US taxation)

Is this the case for me? I don't see how that can be correct that I can't get an ISA when I have paid UK tax all my life and have no financial ties to the US. Am I misunderstanding my status.

My understanding is that the US does not give out passports to those that are not US nationals.  However, being a US national does not mean you a US citizen.   Apparently, you can tell by looking at your US passport on the photo page which shows "Nationality".  It is says  "U.S. National" then you are not a citizen.   If it says "USA" then you are.  Elsewhere if you are not a citizen it will say "The bearer is a United States national and not a United States citizen."

When I search I see lots of scary articles about how I should be filling in my US tax returns....should I be looking into this...what world of pain awaits me. 

For most its not a world of pain and quite a short job.   However, there are some anomalies.  For example, in the UK, you are exempt from tax on gains on your primary residence.  You would not be under US taxation.   However, the gain allows under your primary residence before you are actually taxed is quite high.   So, it would only capture more expensive property owners or those that stay in one property for the long term in a high gain period.   Investments are an area that can be captured too.  

williamcroome

Thank you @dunstonh for information. My passport confirms I am a citizen. In your opinion as an IFA should any standard IFA be able to advise me on how to proceed? Or do I need to find someone specializing in dual citizenship.

Thanks 

dunstonh

williamcroome said:

Thank you @dunstonh for information. My passport confirms I am a citizen. In your opinion as an IFA should any standard IFA be able to advise me on how to proceed? Or do I need to find someone specializing in dual citizenship.

Thanks 

No. I'm afraid not.    Most IFAs will not be allowed to give advice to US citizens as their liability insurance will not cover them.  
As a US citizen, you will find most advisory firms and some mortgage brokers/advisers will not be allowed to provide advice.  Many providers will refuse as well.
Those that specialist in expats will be able to.    It is one of those things that the liability insurance costs a lot more and you have to be active in that area to justify getting US coverage included and most firms will not be.