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UK investment while living in US advice

UK investment while living in US advice

Old May 22nd 2020, 10:23 am
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Default UK investment while living in US advice

Hello, im based in the US currently going through the green card process. I have a decent chunk of savings back in the UK which i wish tl invest. Post brexit exchange rate is obviously terrible so ive not transferred it here and am now thinking of options for investment in the UK. I do not need the funds ao am happy to keep them invested long term in the UK.
ISA's are not possible so im looking to open a brokerage account and purchase index funds (Vanguard possibly). What would be the tax implications for this in both the UK and the US? Would i have to fill out an annual return in the UK? Would I also need to declare anything in the US? I dont plan to withdraw anything and would want to reinvest any dividends.
Any general advice much appreciated.
Thanks
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Old May 22nd 2020, 12:49 pm
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Default Re: UK investment while living in US advice

Any foreign held accounts have to be declared to the IRS.

You'd be looking at capital gains tax that might sting depending on the exchange rate at the time.

The general advice here on BE is that if you intend to remain in the US permanently, you should go ahead and move your assets to the US due to the potential tax and reporting implications down the line.

I'm sure someone more knowledgeable will be along soon to answer
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Old May 22nd 2020, 1:18 pm
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Default Re: UK investment while living in US advice

Any investment in offshore funds, including those offered by Vanguardinvestor.co.uk will be treated by the IRS as Passive Foreign Investment Companies (PFICs) and receive punitive taxation. Individual foreign stocks and bonds are okay. For example I have a 3 year bond with HSBC paying 2%/year which is hardly a great investment but is only taxed as regular interest by the IRS. I also have Income bonds through NS&I which are taxed as regular interest.

As a non-resident in the UK HMRC will not tax on any income you have, whether that is in the UK or overseas.

My status is a UK/USC currently living in the UK and my main investments are with Vanguard.com in the USA in funds recognized by HMRC and receiving the lower UK taxes on capital gains and dividends. (so called "HMRC Reporting" funds). I did live in the USA for 29 years and during that time paid no UK taxes including the interest from UK savings accounts - in those days the interest was taxed at source so I had to file for an exemption and receive the interest gross.
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Old May 22nd 2020, 1:28 pm
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Default Re: UK investment while living in US advice... ALSO FBAR!

Thanks to all for the responses. Having looked into this further I have stumbled on a whole new can of worms - FBAR.

A little background. Moved to the US in 2016 on an F1 student visa. Completed degree in July 2018. Changed to F1-OPT and started working in the US 11/2018. I did submit a tax return for 2018. Was selected in the H1B lottery in 2019 and H1b status began 10/2019. I just had my tax return filed.
My question relates now to FBAR. I have a UK account with $100k so from what I'm reading i need to fill out an FBAR. Am I late in doing this so far? Do I also need to fill out form 8938? I have no source of income in the UK only an account which does not receive any interest. I am a W2 employee here and made around $180k in 2019.
Thanks for any advice.
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Old May 22nd 2020, 1:33 pm
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Default Re: UK investment while living in US advice

Originally Posted by civilservant View Post
Any foreign held accounts have to be declared to the IRS.

You'd be looking at capital gains tax that might sting depending on the exchange rate at the time.

The general advice here on BE is that if you intend to remain in the US permanently, you should go ahead and move your assets to the US due to the potential tax and reporting implications down the line. ....
I agree, you've said about all that needs to be said.

If you want to invest and benefit from a future rise in the value of sterling, bring your money to the US, per Civilservant's excellent advice above, and then invest in US funds that invest in the UK - investment returns will reflect the increase in the value of sterling.
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Old May 22nd 2020, 1:39 pm
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Default Re: UK investment while living in US advice

It sounds like you do need to file an FBAR for tax year 2019 but you have not gone past the extended deadline of October 15th.

https://www.irs.gov/businesses/small...-accounts-fbar

When to File

The FBAR is an annual report, due April 15 following the calendar year reported.

You’re allowed an automatic extension to October 15 if you fail to meet the FBAR annual due date of April 15. You don’t need to request an extension to file the FBAR.
It also looks like you were over the limit to report those accounts on your IRS return. If you have already filed then you can file a corrected return with the the relevant forms 8938. No extra tax owed and no penalties certainly not in the light of the Covid crisis which has extended filing deadlines.

https://www.irs.gov/businesses/corpo...nancial-assets


  • Unmarried taxpayers living in the US: The total value of your specified foreign financial assets is more than $50,000 on the last day of the tax year or more than $75,000 at any time during the tax year
  • Married taxpayers filing a joint income tax return and living in the US: The total value of your specified foreign financial assets is more than $100,000 on the last day of the tax year or more than $150,000 at any time during the tax year
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Old May 22nd 2020, 1:51 pm
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Default Re: UK investment while living in US advice

Thanks for the clarification. I will get this amemded on my current tax return and fill out the FBAR. Should i have done this on my 2018 return (i worked from Nov-Dec 2018) om an F1 OPT visa and should i be concerned about a penalty if required to file. Fbar/8938 for this period?
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Old May 22nd 2020, 2:23 pm
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Default Re: UK investment while living in US advice

Originally Posted by Orthodude16 View Post
Thanks for the clarification. I will get this amemded on my current tax return and fill out the FBAR. Should i have done this on my 2018 return (i worked from Nov-Dec 2018) om an F1 OPT visa and should i be concerned about a penalty if required to file. Fbar/8938 for this period?
I really don’t know, sorry.
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Old May 22nd 2020, 3:56 pm
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Default Re: UK investment while living in US advice

Originally Posted by Orthodude16 View Post
Thanks for the clarification. I will get this amemded on my current tax return and fill out the FBAR. Should i have done this on my 2018 return (i worked from Nov-Dec 2018) om an F1 OPT visa and should i be concerned about a penalty if required to file. Fbar/8938 for this period?
Do you guys still have to file a FATCA as well as the FBAR?
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Old May 22nd 2020, 4:01 pm
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Default Re: UK investment while living in US advice

Originally Posted by Cape Blue View Post
Do you guys still have to file a FATCA as well as the FBAR?
Yes, that is the form 8938 mentioned above.
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