Opening an ISA
 

I now live in the U.S.

To open an ISA you are required to be a UK resident for tax purposes.
Does that mean you have to wait until you've filed a tax return in order to open an ISA?

I was wondering if, in theory, when I went back on vacation and if I decided I'm staying, opened an ISA almost immediately,(I still have an account with the Nationwide.), but then changed my mind a week later and came back to the U.S., would that actually be breaking any rules for which there may be consequences?

Re: Opening an ISA
 

I'd forget about this if you're a U.S. resident for tax purposes. In that case, you're taxable on your worldwide income, and ISAs are not tax-free under IRS rules. One of the many differences in the treatment of tax-friendly vehicles between the two countries.

Re: Opening an ISA
 

I was thinking an ISA would be handy when I move back but probably it's too complicated. Really my query was just a wee bit of hypothetical pondering.

Re: Opening an ISA
 

I dare say you could open one if you had an address to use, from a purely mechanical point of view. Certainly, there's no requirement to close an ISA when you stop becoming UK resident for tax purposes (although you cannot add further to them). I'd be more worried about the potential UK tax liabilities of declaring (falsely) that you were UK resident for tax purposes and, as I said, you'd be taxed on the interest by the IRS anyway. Not worth it, I would say.

Re: Opening an ISA
 

Don't even think about it! There are far better US investment options open to you as a US resident.

FYI a ISAs are UK tax free, but are NOT tax free in the US, so you have to declare any gains on your US tax. If you ever get a UK ISA make sure it's a cash ISA, this is a saving account and UK interest goes on Schedule B. DO NOT buy a UK stocks and shares ISA....this is either PFIC or a foreign trust (people differ on this) but either way the tax filing becomes very complicated and the taxes are punitive.

Re: Opening an ISA
 

Do you have to be resident in the US to take advantage of the investment options you mentioned, or is it enough to be a citizen even if you are living abroad? What if you start the investments when you are rsident in the US and then move?

Re: Opening an ISA
 

I was thinking of the US resident and accounts like IRAs, ROTH IRA and just general inexpensive mutual fund investments. If you are not US resident it can be hard to open up new US investment accounts, but you should be able to use ones you opened up when you lived in the US. However, you'll have to comply with your local tax laws about foreign investments as well as US tax rules. For example if yo are taxed on an arising basis, the UK will tax gains in many offshore funds as income and not capital gains. You have to make sure the offshore fund is a "reporting fund". One good avenue for the US citizen resident in the UK is the ROTH IRA. If you use foreign tax credits rather than FEIE you can have earned income on your 1040, probably no US tax due, and you can contribute to a US ROTH. The ROTH is covered in the US/UK tax treaty and income and gains on it are tax free in the UK too.