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Cash ISA's not available to dual UK/US citizens

Cash ISA's not available to dual UK/US citizens

Old Oct 25th 2012, 2:25 pm
  #16  
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Default Re: Cash ISA's not available to dual UK/US citizens

Originally Posted by sir_eccles
It's in the terms and conditions:

http://www.postoffice.co.uk/sites/de...sh_ISA_KIP.pdf

Some banks are probably more willing to deal with US reporting regulations than other banks.
The bit that matters:
"The Post Office Premier Cash ISA is not available to US persons. This includes citizens or residents of the United States.
If you become a US person after your Account has been opened, you must let us know immediately. This may result in your Account being closed, and the value returned to you.
"
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Old Oct 25th 2012, 2:50 pm
  #17  
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Default Re: Cash ISA's not available to dual UK/US citizens

Originally Posted by Celticspirit
Do you have children in the USA?
Once they become adults, you might decide to have a frank discussion with them about what is happening to this country. Perhaps they might decide not to remain here either. Problem solved.
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Old Oct 25th 2012, 3:09 pm
  #18  
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Default Re: Cash ISA's not available to dual UK/US citizens

Originally Posted by sunnysideup
Once they become adults, you might decide to have a frank discussion with them about what is happening to this country. Perhaps they might decide not to remain here either. Problem solved.
Wish it was so easy. My son is 42 (single) and a psychiatrist on staff at Columbia/Pres in NYC. No private practice here. He was born in the UK.
Second child born in Dallas...Never got her UK citizenship in spite of my advice. Now things have really changed for her.......married ( lawyer ) with an American husband ;-(
Gotta leave her behind...
!
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Old Oct 28th 2012, 5:14 am
  #19  
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Default Re: Cash ISA's not available to dual UK/US citizens

Originally Posted by Brigette
I read an interesting thread about US citizens renouncing their citizenship on UK-Yankee. If I can find the thread I'll post a link here
If you can locate it I would be interested.
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Old Oct 28th 2012, 5:17 am
  #20  
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Default Re: Cash ISA's not available to dual UK/US citizens

Originally Posted by sunnysideup
This may be a bit simplistic but why do they have to know that you are a dual citizen? Can't you just conveniently ignore your US citizenship? If there are forms to fill out, say you are just a UK citizen. Or am I missing something?
I suffer the curse of honesty.
If they (the Post Office, aka Bank of Ireland) ask me if I am a USC then I am self-obligated to admit it.
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Old Oct 28th 2012, 5:34 am
  #21  
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Default Re: Cash ISA's not available to dual UK/US citizens

Originally Posted by nun
Yes it's FATCA related, even though the the recent UK/US agreement means that for a financial institution ISAs aren't part of FATCA. I think the PO has decided to play it safe and just cut off all US citizens. As a UK/US dual citizen I'd call my MP and complain about it. But the ISA has few advantages for a US citizen anyway as stocks and shares ISAs have to be avoided because of US tax rules and any interest on a cash ISA is taxable in the US.

IMHO it's only worth staying a US citizen if you live in the UK if you have US citizen family members and want to avoid the possibility of immigration issues, ever might want to live in the USA again or have substantial assets in the USA that you cannot easily liquidate and bring to the UK.
We have 401k / IRA in USA and I feel comfortable with our investment choices there. I feel need to get more street-wise on UK investments options before I bring ££ lumps here.
Also to understand the financial consequences of renouncing USC and do some figuring.
Caution in finance has served me well so far, pity I didn't see this financial stuff coming before we became USC's.
As someone else said, I'm not feeling that I am a citizen of the land of the free right now.
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Old Oct 28th 2012, 8:30 am
  #22  
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Default Re: Cash ISA's not available to dual UK/US citizens

Originally Posted by J.JsOH
We have 401k / IRA in USA and I feel comfortable with our investment choices there. I feel need to get more street-wise on UK investments options before I bring ££ lumps here.
Also to understand the financial consequences of renouncing USC and do some figuring.
Caution in finance has served me well so far, pity I didn't see this financial stuff coming before we became USC's.
As someone else said, I'm not feeling that I am a citizen of the land of the free right now.
I would not advise you to bring lump sums to the UK until you understand the US tax consequences of UK investments. Anything other than a bank or fixed term savings account is going to be complicated and potentially costly in how it is taxed by the US. Obviously FBAR and FATCA forms also have to be considered.

The 401k/IRA is tax free in the US and the UK while it is accumulating under the tax treaty, but you have to make sure you tell HMRC that you are electing to have them covered by the treaty. Once you take income out you have to use the treaty Article 24 to apportion the income tax correctly between the US and the UK. If you weren't a US citizen you taxes would be a lot simpler as 401k/IRA withdrawals would not be US taxable so no 1040 would be required, a W-8BEN and assertion of Article 17 would stop any US withholding. You could move any money you have in the US outside of retirement accounts to the UK and buy an ISA and any UK financial product eg. a tracker fund without worrying about PFIC and foreign trust issues, also say goodbye to FBAR and FATCA. Bottom line is that as just a UK citizen you'd only have to deal with HMRC and not have to bother working out how the various treat articles apply and how to resource US income to get the correct foreign tax credit.

Last edited by nun; Oct 28th 2012 at 8:38 am.
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Old Oct 28th 2012, 10:18 am
  #23  
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Default Re: Cash ISA's not available to dual UK/US citizens

Originally Posted by J.JsOH
If you can locate it I would be interested.
I found the following threads:

http://tiny.cc/zdtwmw (please check out the link in the thread I found it to be very useful)

http://tiny.cc/l9swmw

http://tiny.cc/9gtwmw

You might find the following interesting:

http://tiny.cc/7itwmw

http://tiny.cc/wbtwmw
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Old Oct 28th 2012, 11:12 pm
  #24  
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Default Re: Cash ISA's not available to dual UK/US citizens

Originally Posted by Brigette
I found the following threads:

http://tiny.cc/zdtwmw (please check out the link in the thread I found it to be very useful)

http://tiny.cc/l9swmw

http://tiny.cc/9gtwmw

You might find the following interesting:

http://tiny.cc/7itwmw

http://tiny.cc/wbtwmw
Thanks for finding and posting the USC Renunciation threads Brigette.

One embedded thread I found interesting in it's balanced arguments is http://hodgen.com/why-people-expatriate/

Also thanks to Nun who, as always, has dived deep into the financial implications of dual UKC / USC.

To my original post, the financial consequence of not being able to hold a Post Office ISA at 3% and going instead to a 2.8% ISA elsewhere is not in itself reason for me to renounce USC, it is merely £11.28 of tax free interest less in a year. Besides as a retired low income person, I could just get a normal 3% savings account and have no tax obligation anyway. I'm coming round to thinking that starting new cash ISA'a are not an interesting aspect once in low-income retirement.

The intrusion of USA policies on my right to live in UK as UKC is another matter and my objection to the intrusion plus the required US IRS reporting may drive me to renounce to shed my life of this complication.
We have no family in USA and therefore no need to return to USA once we have decided that we are satisfactorily settled in UK.
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Old Oct 28th 2012, 11:19 pm
  #25  
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Default Re: Cash ISA's not available to dual UK/US citizens

Originally Posted by nun
I would not advise you to bring lump sums to the UK until you understand the US tax consequences of UK investments. Anything other than a bank or fixed term savings account is going to be complicated and potentially costly in how it is taxed by the US. Obviously FBAR and FATCA forms also have to be considered.

The 401k/IRA is tax free in the US and the UK while it is accumulating under the tax treaty, but you have to make sure you tell HMRC that you are electing to have them covered by the treaty. Once you take income out you have to use the treaty Article 24 to apportion the income tax correctly between the US and the UK. If you weren't a US citizen you taxes would be a lot simpler as 401k/IRA withdrawals would not be US taxable so no 1040 would be required, a W-8BEN and assertion of Article 17 would stop any US withholding. You could move any money you have in the US outside of retirement accounts to the UK and buy an ISA and any UK financial product eg. a tracker fund without worrying about PFIC and foreign trust issues, also say goodbye to FBAR and FATCA. Bottom line is that as just a UK citizen you'd only have to deal with HMRC and not have to bother working out how the various treat articles apply and how to resource US income to get the correct foreign tax credit.

Nun, Re: Telling HMRC that we have treaty covered 401k/IRA - do you have any more info or links to this at hand ?
Does this have to be reported to HMRC even if taking no income from the 401k/IRA?
I can look into this with HMRC but if you have info at hand it may save me some floundering and wrong turns.

Thanks
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Old Oct 29th 2012, 12:02 am
  #26  
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Default Re: Cash ISA's not available to dual UK/US citizens

Originally Posted by J.JsOH
To my original post, the financial consequence of not being able to hold a Post Office ISA at 3% and going instead to a 2.8% ISA elsewhere is not in itself reason for me to renounce USC, it is merely £11.28 of tax free interest less in a year. Besides as a retired low income person, I could just get a normal 3% savings account and have no tax obligation anyway. I'm coming round to thinking that starting new cash ISA'a are not an interesting aspect once in low-income retirement.
As you are a US citizen the cash ISA is not tax free. Any interest has to be reported on your US taxes and the appropriate tax paid. However, they are still a good idea if you have excess foreign tax credits to cover that US tax. Stocks and shares ISAs are definitely not a good idea as they require PFIC and foreign trust filings and are taxed at high rates by the IRS.

Last edited by nun; Oct 29th 2012 at 12:18 am.
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Old Oct 29th 2012, 12:11 am
  #27  
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Default Re: Cash ISA's not available to dual UK/US citizens

Originally Posted by J.JsOH
Nun, Re: Telling HMRC that we have treaty covered 401k/IRA - do you have any more info or links to this at hand ?
Does this have to be reported to HMRC even if taking no income from the 401k/IRA?
I can look into this with HMRC but if you have info at hand it may save me some floundering and wrong turns.

Thanks
You should mention the 401k/IRA accounts on your UK self assessment form or just write to HMRC and declare them and say that gains within them are not taxable under Article 18 of the US/UK DTT. HMRC does not have a specific form for this, but strictly speaking you are supposed to let them know, I don't know what happens if you don't, but I bet as you have no tax liability under the treaty is wouldn't be a big deal. It's just best to be really pedantic IMHO. Here is a discussion about this.

http://talk.uk-yankee.com/index.php?topic=76895.0

Last edited by nun; Oct 29th 2012 at 1:29 am.
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Old Oct 29th 2012, 1:10 am
  #28  
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Default Re: Cash ISA's not available to dual UK/US citizens

Originally Posted by nun
You should mention the 401k/IRA accounts on your UK self assessment form or just write to HMRC and declare them and say that gains within them are not taxable under Article 18 of the US/UK DTT. HMRC does not have a specific form for this, but strictly speaking you are supposed to let them know. Here is a discussion about this.

http://talk.uk-yankee.com/index.php?topic=76895.0
You need to start charging for advice - you could retire in a year!
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Old Oct 29th 2012, 1:38 am
  #29  
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Default Re: Cash ISA's not available to dual UK/US citizens

Originally Posted by dunroving
You need to start charging for advice - you could retire in a year!
I'm just an amateur at all this so please double check anything I say. I've done a lot of research and asked a lot of questions in the last couple of years to prepare for an eventual return to the UK. I understand most of the principles, but the details of dual tax returns can get complicated quickly because of the different UK and US tax years and the various rules for different income sources, dividends, capital gains etc. There are definitely financial arrangements and things to avoid that will simplify your taxes, but I'd still recommend getting some professional advice unless you have a very simple return. After a couple of year you might then be able to do them yourself using previous professionally prepared forms as a template.
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Old Oct 29th 2012, 8:42 am
  #30  
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Default Re: Cash ISA's not available to dual UK/US citizens

Originally Posted by nun
You should mention the 401k/IRA accounts on your UK self assessment form or just write to HMRC and declare them and say that gains within them are not taxable under Article 18 of the US/UK DTT. HMRC does not have a specific form for this, but strictly speaking you are supposed to let them know, I don't know what happens if you don't, but I bet as you have no tax liability under the treaty is wouldn't be a big deal. It's just best to be really pedantic IMHO. Here is a discussion about this.

http://talk.uk-yankee.com/index.php?topic=76895.0
Thanks Nun.
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