Best savings accounts for American Expats

SuzeQStan

Tax treaty between US & UK protects pension from double taxation. Same for interest or ‘passive’ streams of income.

EdSwippet

SuzeQStan said:

Tax treaty between US & UK protects pension from double taxation. Same for interest or ‘passive’ streams of income.

Again, not exactly. Where you have unearned (passive) income, Article 24 of the treaty requires that the US give a tax credit against any UK tax paid. In many cases that wipes out any actual US tax liability. Not all cases though, with an ISA potentially being one of them; here you can have income that the US will tax, but with no corresponding UK tax payable to offset it.

sv511

SuzeQStan said:

gt94sss2 said:

sv511 said:

The best cash ISA I've found is Principality Online Bonus 5  at 4.75%.   This is confirmed to work.
 

You probably already know this but while interest in an ISA is considered tax free by UK authorities, the IRS does not recognise it as such.

Sure but total income has to exceed $120000 before anything additional tax wise needs to be paid.  

This.   My total income is well below the threashold.   

sv511

Our income is a mix of UK and US pension annuities, UK salary and interest on saving.  I  work. My wife is retired.     We pay a tax expert to fill in the forms for us.     US tax on the interest  should be less than we would pay in the UK.  


The interest won't be paid until April 2025.  It will not come due in this US tax year. 


I could request a meeting with our tax guy. He charges £600/hr billed per minute, for tax advice.  By the time he looks at our exact circumstances and figures out if an ISA is worth it, I might have paid more for the advice than the potential tax owed. 

SuzeQStan

Same here OP - I’ve been compliant for about 15 years now after 15 years of not realising I should have been filling out a tax return every year. I fill it out myself - only needed paid for assistance the 1st year to get myself compliant and the 2nd year to deal with a small inheritance.  I’ve got several years worth of cash ISAs obviously declared on FBAR and never had any interest tax to pay to Uncle Sam as yet.

sv511

AmityNeon said:

Easy Access: 4.87% AER
Oxbury - Easy Access Account Special Edition 1

Cash ISA: 4.92% AER
Plum Cash ISA
(it's only their investment accounts that prohibit US citizens/residents)

We can not use Oxbury.  They specifically say their accounts can not be held by US Citizens. 

• Be resident in the UK (including for tax purposes). Our accounts cannot be held in trust or by US Persons (meaning US citizens, residents, green card holders or taxpayers in respect of their worldwide income)7

sv511

I've done some research and the interest income from a Cash ISA does appear to be taxable in the US.  

US Federal tax rates can be lower than the UK.  Taking the standard or itemized deduction should reduce any US tax liablity. 
 A cash ISA could be worth it.     Disclaimer - I'm not qualfied to give financial advice.  Be sure to do your own research or consult a tax expert. 


For reference - 2024-25 US Tax Brackets. 

2024 Federal Tax Brackets

Rate	Single	Married Filing Jointly	Married Filing Separately	Head of Household
10%	$0 – $11,600	$0 – $23,200	$0 – $11,600	$0 – $16,550
12%	$11,600 – $47,150	$23,200 – $94,300	$11,600 – $47,150	$16,550 – $63,100
22%	$47,150 – $100,525	$94,300 – $201,050	$47,150 – $100,525	$63,100 – $100,500
24%	$100,525 – $191,950	$201,050 – $383,900	$100,525 – $191,950	$100,500 – $191,950
32%	$191,950 – $243,725	$383,900 – $487,450	$191,950 – $243,725	$191,950 – $243,700
35%	$243,725 – $609,350	$487,450 – $731,200	$231,251 – $365,600	$243,700 – $609,350
37%	$609,350+	$731,200+	$365,600+	$609,350+

sv511

Coventry Building Society Triple Access Saver (On-line) (5).     4.83% variable gross. Interest paid monthly or annually into an account of your choice.    £1 - £250,000  Penalty after 3 withdrawls per year.   Interest rate can change with 14-days notice. 

Single or Joint Accounts.   
Confirmed to work for US Expats tax resident in the UK. 

 
https://www.coventrybuildingsociety.co.uk/member/savings/all-savings.html

SuzeQStan

thanks thanks I’ve been looking for a new isa but preferred a fixed one. Going to have to adjust my expectations as I’ve got mine all with Virgin at above 5% apr. 

SuzeQStan

On side note not sure what is gonna happen once Nat’wide takeover as Nat’wide refused me when I tried to cash an inheritance cheque from USA. Hoping they will honour prior arrangements