uk_grenada

What happens re tax if the op just buys shares or investment trusts in the uk? I assume its only one set of tax, and the upside is whatever he chooses to run with.

mrken30

If you are living in the US you will need to use a US tax efficient vehicle if you dont want to pay taxes. Take a hit on the exchange rate and invest using IRA and 401k. I have made about 30% returns on my UK investments this year and pay no tax. I invest in iShares UK ETFs and TRP Mutual funds. I know the exchange rate is low, but the tax will eat some of those profits if you invest in the UK.

uk_grenada

Can you not invest in the us from the uk? Then how is that a foreign investment fir us tax purposes?

Eg i have shares in apple in dollars bought in london, i have bulp funds [physical gold] that can be in zurich today and ny tomorrow, and changes currency on moving?

If i sell the shares in the uk they have to change to pounds which could be good or bas, but i can also transfer them within the same investment house to another country [but for a uk national with an isa, not a good idea.]

Might need some expert advice but sounds reasonable?

mrken30

Yes you can buy apple shares from the UK either directly through a broker or via an ETF or mutual fund. I bet many UK pensions hold some Apple stock directly or indirectly. The UK brokerage will send all the relevant UK tax information and it's not a big deal if you are a UK tax payer. As a US resident you will have FATCA and other extra paperwork if you buy through a UK broker.

From a tax reporting perspective it is better to buy stock through a local brokerage firm.

warren505

As a US resident or US tax payer( same for tax purposes) you cannot buy a ISA. Vanguard U.K. Won't take my money to invest ( they don't do the Fatua filing).
I know nothing about U.K. Investments or even the name of a U.K. Investment group.....the only option I can think of is going to the bank and have them invest for me but I don't really have that kind of money and I'm sure their fees are outrageous ......

mrken30

If you are a US resident, buy a Vanguard IRA . You can then buy UK based investments within that IRA. You will then be able to use that to save on paying US taxes. You may also want to T Rowe Price as they have UK investments that you can buy free of commision. If you have over $50k, you could look at Merrill Edge also.

As a US resident, I would not attempt to open an ISA in the UK as you will pay US tax on the investment.

warren505

Thanks for thoughts but the problem is that I have GBP in the UK that needs to be invested as a hedge against inflation as a minimum because the exchange rate is 15-20% below the 5-6 years pre brexit rate. It's a lot of money to give up over exchange rate. I dont care what I invest in I just want to get something close to simple S&P in US type return. Which I am discovering is a joke outside USA. Cheers.

durham_lad

I've been in your situation, living in the USA and receiving inheritances in the U.K. I didn't attempt to buy stocks and shares funds or unit trusts as they are considered PFICs by the IRS and heavily taxed. I couldn't buy into cash ISAs or government bonds through NS&I as you have to be resident. My UK bank, HSBC, had various other savings accounts and all but the online bonus saver scheme were not available to non residents. I ended up simply putting the money into the HSBC bonus saver account earning meager interest compared to what I was earning in my US equity and bond funds.

What I did was put all my US cash into equity funds and counted my U.K. cash as my emergency fund, which fortunately I did not need to tap over the 5 years I was in this situation. We moved back to England over a year ago and now can have cash ISAs, NS&I bonds etc. I still don't touch UK stocks and share funds but I still have a US brokerage account, including both IRA and after tax accounts where I do my investing.

mrken30

That more or less what I have done, except I have invested some of my US cash into UK equity funds through my US IRA to compensate for rise and gains in the pound. The reason my UK funds have gone up so much recently, almost 5% in a month is because the pound has strengthened against the dollar.

EWUS is almost equivalent to FTSE 250 This tends to ride the exchange rate more.
EWU is almost equivalent to FTSE 100 . The FTSE tends to go down when pound strengthens.

warren505

Thank you, that's what I have found out too.
I was hoping there was some other option but it seems not. My brother in Suggested premium bond (£50k max) might be an under radar option for some funds.
https://www.moneysavingexpert.com/savings/premium-bonds
Has a long analysis but if you can't get into saving it's an option for some cash.
Might try . Won't beat inflation but tax free. ....
Cheers Warren

warren505

I did wonder about whether just taking the big exchange rate hit and then invest in us market so I would be ahead of the game over a few years VS waithinfor ecxhange rate improvement....Has anybody tried to calculate this? Thanks warren

Cook_County

Premium bond prizes are fully US taxable for a US person.

durham_lad

That is also my understanding and I expect winnings will be treated as regular income by the IRS.

mrken30

Investing in UK equities through a US IRA hedges the exchange rate a bit and saves on taxes. Only problem is that you can only invest $5500 a year. Unfortunately 401k funds do not have as much variety in choices.

Investing in US only stock is more of a gamble with FX rates.

My UK small cap equities are doing much better than my US ones.

mrken30

It may also be illegal to hold premium bonds as a US resident. It comes under same laws as online gambling, I believe.