In learning about ISAs, it has occurred to me that there might be tax advantages to investing in the UK instead of the US. I'd be grateful for thoughts on whether this is correct.
I currently have about $10,000 sitting in a crappy savings account in the US, and I've been contemplating buying into an index fund, say, tracking the S&P500. If I do that, I get to pay capital gains tax when I sell it (assuming any gain, naturally).
If I understand things correctly, I could instead transfer it here and put up to £7200 (per year) into an ISA tracking some sort of FTSE fund -- and any gains would then be tax-free. (I shouldn't have to worry about US tax, as I normally have plenty of credit via the 1116 to eliminate any US liability on UK income.)
Considering just the tax implications (in other words, assuming equal gains for both funds, stable exchange rates, etc.), am I right in thinking that it would be better to do the latter?
I know in the end there are a number of things to consider -- e.g. how long I plan to stay in the UK, etc. But holding everything else constant, I do get the sense that the tax issue on its own makes the UK a better choice. The weakness of the pound would also make this a good time to transfer the cash over here.
