US Citizen

gt94sss2

Divefrosty said:

Now this month, financial institutions (Fidelity Investments and Aviva), are starting to report they will be closing down her ISA’s and investment accounts (within 30 days), because she was born in the USA, and is still a US citizen, even though they have and are retired here in the UK for over 25 years.  

Supposedly, if my father wasn’t retired, he would still be current Crown Employee, so everything would still be okay but he’s 84 and receiving his Crown pension. 

Can they really do this is, it’s sounds totally unfair and madness!

There are two different things here which I think is getting confused. 

1. There are rules allowing crown employees and military personnel living overseas which enable them and their families to be treated as living in the UK for financial products/income tax.

2. There is a totally separate issue regarding American tax rules such as as the Foreign Account Tax Compliance Act passed by Congress in 2010 requiring financial institutions overseas to report on any accounts held by US citizens accounts globally.

Your mother as a UK tax resident is entitled to apply for an ISA. When she was overseas, this UK tax residency would have been covered by the crown employees rule.

However, I suspect the financial institutions you refer to above would still have refused her an account due to her US nationality and their desire not to risk non compliance with the much more recent US legislation.

If your mother wants an ISA/investment account, their will be other brokers in the UK willing to offer her an account despite her US citizenship and the additional reporting requirements they will face.

Bostonerimus1

The ISA is a useless wrapper for US citizens as it is not recognized by the IRS and any fund you buy inside it will be PFIC and taxed an under pretty complicated and costly rules. The general advice is for US citizens living in the UK to avoid UK investment funds unless they are inside a pension wrapper covered by the US UK Double Tax Treaty.