Money market account UK style?

i have two schwab accounts in the US.  one is my Roth IRA and one is my generic money market account.  I have each of these in a diversified portfolio of mutual funds. 

the roth i can't withdrawl from (except for use as a pension, higher education, a few other reaons), i can put my limit of $3000 or $4000 (rules may have changed), but the growth is tax free.

the generic money market account is just bog standard.  i pay capital gains taxes of money i take out.

and yes, i know that if i transfer $ to £ i will be liable to UK taxes.

my question is this- is there an equivelent thing here in the UK?  a UK brokerage account?  my boyfriend may be selling his house soon and he'd like to invest his profit.  any directions in the correct direction would be super.

i've looked & searched & looked and I can't find anything.

how do others invest in the UK? 

my boyfriend has a fidelity account but he's paying 4% a month for their "advice".  i find that ridicilous!

also- i've had a search and can't find but i'm sure there was a thread about good investment books recently...

Hi Meggles,

I'm a very basic beginner in things like this, I used to talk to ALOT of people when I worked at Intuit (internally and from users of the software) who had very complex investment affairs, were tracking them in Quicken and who knew a whole heap more about it than what did/do!

I suggest you nip over to http://www.fool.co.uk/  - click discussion boards on the top right and then look through the 'Investors roundtable' section. There's people/posters there who'd be able to answer every question you can think of! and if not, they'll know of various specialists around who you may want to contact.

I'm working on my "financial tracking" website in the background to our main business's and hope to let UKY's know when its ready soon.

Cheers! DtM! West London & Slough UK!

meggles, I hear a lot about ISAs over here, but I don't know that much about them.  Wondering if they are similar to money markets as you described?

Hi Carolyn,

I have an ISA - mini ISA and have been paying in £100/month over the last 49 months or so. Whilst I can't rememebr 'exactly' how it works, I do know that the company I invest with, sread the money I pay in between various types of stocks and from different sectors. there are plenty of plain english guides around, and many banks and building socities should have leaflets in branches and info on thier websites. Take a look through, then ask questions on 'the motley fool' website (link above in my last post)

I'm trying to learn more on this type of stuff, and brush up on what I used to know - it is and can be very complex, especially when you add in the equation that UKY Americans may be subject to different tax laws etc ..

Good luck in the meantime!

DtM! West London & Slough UK!

ISAs are very useful but there is a limit you can put in each year.  Similar to an Roth IRA the investment grows tax free, unlike an IRA, you can take the money out whenever you want tax free.
You can put up to £3000 into a Mini Cash ISA and £4000 in a Mini Stocks & Shares ISA in 1 year.  Or you can opt to put £7000 into a Maxi Stocks & Shares ISA in 1 year but you can only do either Minis or Maxis, you can't combine the 2.  If you are looking to put more than £7000 in one year then you will need to go with some kind of brokerage account I think.  I find it hard to believe that all of Fidelity's or other brokerages charge 4% or more, perhaps there are some kinds of funds that charge less?  I'm not really sure as I haven't invested in any myself yet.

btw, I've read on these boards that there could be huge IRS tax implications with equity investments, so I would tread lightly and seek advice before buying.

Similar to an Roth IRA the investment grows tax free,

But I think if you are liable to US tax (that is, an American citizen) the investment growth from an ISA would be taxable by the IRS. Note that it would be unearned income so not covered by the earned income exemption.

For US citizens or green card holders interest, dividends and capital gains on ISA investments are:
1. Taxable in the United States
2. Reportable on Form TDF 90-22.1

A Cash ISA will generate interest income, which is taxable in the US and reportable on the annual US tax return.

A Stocks & Shares ISA could generate interest, dividends, or capital gains; each of which would be taxable to US citizens or green card holders.

If the Stocks & Shares ISA is invested in UK unit trusts, investment trusts, OEICS, UK REITS or a few other investments such as ETFs, then additional annual reporting on Form 8621 is required (there is a significant penalty for failing to file this) because these kinds of collective investments are treated in the United States as Passive Foreign Investment Companies; which give the potential for significantly greater tax bills in the United States (Dennis may need to check this).

From an investment perspective, we only qualify to invest in ISAs if (and only if) we are Ordinarily Resident in the UK.  So someone here for only a short (under 3 year) assignment would not be able to open an ISA.

It is also questionable as to what tax advantages might be gained from investing in an ISA, because most US citizens or green card holders resident in the UK are not domiciled within the UK.  So in a nutshell:

a) invest in an ISA if it promises better returns (eg interest rates are good) as compared to non-ISA savings; but

b) if you are not UK domiciled set up separate capital and income accounts offshore and you will (legally) owe zero UK tax on the interest you receive and just have to pay Uncle Sam (sadly at tax rates of up to 35% although your precise US tax rate will depend on your total income)

To turn back to meggles first question, there are indeed brokerage houses in the UK who will manage money if requested ...