UK-US Tax Advisor Recco
#16
Lost in BE Cyberspace
Joined: Jul 2016
Posts: 9,990
Re: UK-US Tax Advisor Recco
My understanding is that you will not be subject to the PFIC taxation rules until you become subject to US taxes which will be the day you arrive on US soil, so selling them prior to arrival in the US should be ok, but definitely liquidate or sell everything except property, pensions, and shares held directly in a company listed on a recognized stock exchange (i.e. sell everything held in a mutual fund of any kind like an OEIC, Unit Trust or Investment Trust). Make sure the sales have settled the cash before you arrive here.
#17
BE Enthusiast
Joined: May 2019
Posts: 341
Re: UK-US Tax Advisor Recco
Would that mean the capital gains made on sale of PFIC in, say, March 2022 while in London, become liable to US taxation at the said draconian rates? I am aware of split year tax treatment, but based on internet searches, seems this is a UK-specific concept and IRS would not care (just like they don't care about tax wrapper ISA).
https://www.irs.gov/individuals/inte...-status-aliens
If I were you, I'd sell everything now before 2022. Before I moved to the US I sold everything and then when I arrived I pretty much straight away purchased the same securities back in the US via a local broker. That way is much simplier and you only pay the transaction fees for selling/buying (minimal on ETFs and such).
#18
Just Joined
Joined: Dec 2021
Location: London
Posts: 4
Re: UK-US Tax Advisor Recco
Thank you for your response. I have sold PFIC relevant positions just to be on safe side. Still trying to figure out regarding property. NY taxes on top of UK taxes make renting it out bit of a hassle.
Are you aware of any structures in the US which are equivalent to UK ISA (tax wrapper)? I read about Roth IRA, but don't think I am eligible and even then the limit is about 6k USD, which is 20k GBP for ISA.
Are you aware of any structures in the US which are equivalent to UK ISA (tax wrapper)? I read about Roth IRA, but don't think I am eligible and even then the limit is about 6k USD, which is 20k GBP for ISA.