How to invest as an American in the UK

First starters, can US citizens invest in the UK?

They can. However, their investment decisions may become more difficult owing to the substantial tax and regulatory woes they must deal with.

All global income, including investment gains made in the UK, is assessed a tax?for US?citizens. But such can be managed by certain systems like tax agreements.

Of course, Americans looking to invest in the UK must determine their financial targets and risk appetite, which will direct asset mix and investment vehicles.

Tax-wise, individual securities may be simpler. They are riskier since they are less diversified, though.

How to Invest in the UK as an American        

Despite the challenges, there are workable approaches and investments for US citizens in the UK.

Let’s look into some of these accounts and options.

Investment Accounts for US Expats in the UK        

• Self-Invested Personal Pensions (SIPPs):

As per?the US-UK tax deal, SIPPs are tax-favored UK?retirement accounts that are treated as tax-exempt accounts until withdrawal. Passive Foreign Investment Companies (PFIC) status means exorbitant levies are not applicable for SIPPs.

• US brokerage:

Certain firms can permit US-domiciled securities investments from abroad. Charles Schwab, for instance, can allow you to invest from certain countries through their International Account.

• IRA and 401(k):

The dual tax agreement likewise acknowledges these accounts, so earnings can grow tax-deferred. They too are exempt from PFIC classification.

• Offshore Investment Accounts:

These are offered by certain financial institutions/banks. They provide access to international markets while respecting standards in the US and the UK.

Investment Options for US Expats        

US Funds with UK Reporting Fund Status (RFS)

The UK HM Revenue and Customs has given certain investment vehicles special tax status.

You pay a reduced capital gains tax (CGT)?worth?up to 20%?on any capital gains you make if a fund has UK Reporting Fund Status.

Without RFS, the gains are subject to income tax, which can be as high as 45%.

American expatriates living in the UK can?buy into?these US Funds with UK Reporting Fund Status?without worrying about the negative tax consequences.

Individual Stocks and Bonds

These products are simple and can sidestep passive foreign investment company issues. You’d need considerable funds to keep your basket diversified, though.

Seeking help from an advisor might be easier to manage any potential hurdles in terms of access, regulations, and other hullabaloo.

If you are looking to invest as an expat or high-net-worth individual, which is what I specialize in, you can email me ([email protected]) or WhatsApp (+44-7393-450-837).

This includes if you are looking for a second opinion or alternative investments.

Some of the facts might change from the time of writing, and nothing written here is formal advice or a solicitation to invest.

For updated guidance, please contact me.