Meet the Other Phone. Flexible and made to last.

Meet the Other Phone.
Flexible and made to last.

Buy now

Please or to access all these features

Money matters

Find financial and money-saving discussions including debt and pension chat on our Money forum. If you're looking for ways to make your money to go further, sign up to our Moneysaver emails here.

Investing as a US person living in the UK

26 replies

boringmath · 09/09/2024 12:32

So I am currently living in the UK and i just turned 18 meaning I got access to my trust fund. I have decided that I wanted to invest this money by opening a stocks and shares ISA (specifically with trading 212). So when I tried to open an account, it told me I could not as I am a "US person" (I was born with duel citizenship USA and UK). Upon further research I discovered the reason why many UK banks do not allow US persons to open ISAs. The short answer is: Under FATCA, non-US banks and other “foreign financial institutions” are obliged to report to the IRS – as provided for by inter-governmental agreements signed by the governments of the various jurisdictions in which the relevant financial institutions are located, and the US government – on the assets held by their American clients. In other words U.S. laws, like FATCA, require foreign banks and investment firms to report accounts held by U.S. citizens to the IRS and many dont want to go through the hassle of that so they wont let us open an account to begin with. Also i was told [im not sure if its true but it sounds it] that the USA doesn't recognize ISAs as a tax free savings account so even if I managed to get an ISA i might not get any benefit from it. So I would like to know, what options do I have for investing/growing my money as a US person living in the UK? (I have plans of probably moving back to the USA in the future as this seems to be the simplest way to solve this issue but not for a minimum of 5 years because i have to finish college and than uni. Yes I looked into revoking my US citizenship and it is not an easy process and you have to pay a lot for it)

OP posts:
boringmath · 23/09/2024 13:00

sansou · 23/09/2024 12:25

The basic answer is that you are severely limited to UK financial products because the US tax system obviously doesn't recognise non US tax free financial products including mutual funds. No point having a S&S Isa and growing UK tax free gains when this doesn't exist in the US tax system and is treated as a gain and subject to US tax accordingly.

It is relatively straight forward to renounce your US citizenship. DH did it 6 yrs ago so we can speak from experience. As you are 18 yrs old, you obviously don't want to take this option if you want to ever live/work there. It's a different matter when you're middle aged and don't wish to sacrifice a hefty pension pot which includes holding mutual funds for decades plus tax on the "gain" made on the value of your home due to currency fluctuations from mortgage overpayments!

As an 18 yr old student who lives here but plans to "return"
to the US in the short term, I would advise to not bother investing or saving in the UK outside of a high interest account since 5 yrs is too short term. You should open a US investment account and do it that way (assuming you have close family members resident there). File your US tax returns (as you should know). If you have never lived there as an adult/ever, it would help in the future when you plan to move there to live/work.

Do you not have close US family members to advise you on this?

Well not really. They do not know much about it.

OP posts:
New posts on this thread. Refresh page