robcos

Hi all,
I'm currently living in the US but I plan to move back to the UK at some point. I have some money in a stock & shares ISA but realized recently that I have fallen into the PFIC trap. To make things worse, I asked my ISA provider if I could by american ETFs with my account and once they realized I was an US taxpayer, they notified that they have to close my account (*)

I've looked around and could not find a good answer but, is there a expat friendly ISA account? The requirements would be:

* Ok to take American taxpayers
* That allows purchasing of American ETFs with UK reporting status. Eg. Vanguard VTI.
* Low cost (optionally....)

(*) They have not said why yet but I assume it is because they don't want to deal with FATCA. Thanks a lot FATCA, this makes it really great for consumers :-( Even if ISAs are exempt from FATCA, some banks still don't want to even get close to it.

Thanks a lot!

mrken30

Invesco UK will send out 1099s for US tax payers, but opening an ISA may not be possible. There is no tax advantage while you are a US tax payer. It may be easier to deal with Invesco US and just invest in European funds.

robcos

There are no advantages today but they will be in the future if I stop being a US tax resident, right? Or am I missing something? (I'm not a US citizen)

MidAtlantic

You cannot contribute to an existing ISA when non-resident in the UK, so I am sure you cannot open one.

https://www.gov.uk/individual-saving...-abroad-or-die

robcos

Thanks for the link - I had seen it before but lost track of it.

First of all, you can be UK tax resident while being US tax resident. I never said I'm not UK tax resident...
Secondly, even if you cannot contribute to the ISA, you can still move your existing ISA contributions to another account. So yes, you should be able to open an account. It's just a matter of finding the good one :-)

mrken30

Also it's probably tidier to keep taxable and non taxable accounts separate. It saves any confusion when speaking to customer service etc.

Saying that, there may be situations , where not having to pay UK taxes and only US taxes would be beneficial.

Pulaski

I don't think you can be tax resident in two countries, and I don't think you would want to be.

Ozzidoc

You can be. I was tax resident simultaneously in the UK and USA - I was living in California but working in the UK for 2.5 years. My work was several weeks on then a few days or weeks off and vice versa.

The UK looks at tax residency in terms of number of days physically present in the UK, if I recall correctly.

robcos

Ozzidoc is very much right unfortunately. It's very hard to be tax resident in zero countries but very easy to be tax resident in multiple ones. For a short period of time I was tax resident in the UK, US and Sweden at the same time

mrken30

Maybe when you're 6 ft under, you will get that luxury.

nun

It is possible to be tax resident in more than one country, but it's usually best avoided because of the complications of cross border tax. You should arrange your affaird to avoid dual tax residency where possible. If the OP is both US and UK tax resident is he claiming the remittance basis for his UK tax?

I would try Charles Schwab in the UK for ISAs......but I doubt you'll be able to open or transfer any accounts without a UK address and residency outside the UK will bar you from a new account.

robcos

Unfortunately, it is not always up to me to decided whether I'm a tax resident or not :-) I wish I could choose...

How is remittance related to my original question? Am I missing something? This stuff can be so complicated.

I do have a UK address - that is not the problem. Unfortunately it does not look like Charles Schwab offers ISAs

mrken30

Did you try Invesco?

nun

If you are a dual US and UK resident then you need to file taxes in both countries. So are you claiming the UK remittance basis or are you being taxed by HMRC on your world wide income. If so you might also have UK non-reporting funds issues. IMHO your best bet is to get out of the ISA and invest in the US.

I actually find it hard to believe that you are a UK resident for tax purposes if you are living in the US.

Steve_

ISAs are designed for UK tax residents, there's no point to it if you don't live in the UK, because you don't need a shelter from UK tax if you don't live there.

All it does is create an enormous paperwork headache with the IRS, so get rid of it.

The closest US equivalent is a Roth IRA. I think Roth IRAs are exempt under Article 18 of the tax treaty but even if they aren't, regular IRAs and 401(k)s definitely are, so put it in one of those.