How do you invest your money

As a US citizen living in the UK, how and where do you invest? Have the new regulations and the "Remittance Basis" made you change your strategy?

So nobody invests?

A self-select ISA. Buy only shares not funds to avoid PFIC nastiness. You only need to worry about US taxes. You have at least a fighting chance to complete all the FBAR/US Tax forms without needing expert help.

I wish I had an answer to your question. Since the financial crash I'm suffering from "investment paralysis"    Who to trust?

A self-select ISA. Buy only shares not funds to avoid PFIC nastiness. You only need to worry about US taxes. You have at least a fighting chance to complete all the FBAR/US Tax forms without needing expert help.

That sounds like a good plan. My retirement funds are all in US based mutual funds so that wrapper and the tax treaty makes the taxation reasonably easy. My after tax money is the concern as I'd like to invest in the UK to keep the money local and not subject to currency
fluctuations. Right now a combo of a high interest saving account, individual shares, and a shares ISA sound good. I've avoided shares so far because of brokerage fees. Are there good discount brokers in the UK and what's your portfolio like, mostly dividend paying stocks?

I use Interactive Investor. The fees are low and the service has been good so far.

I would not normally buy individual shares but interest on bank accounts is laughable and a "US person" in the UK has little else to go for. I stick with blue chip dividend stocks as I am not a trader.

The only tax cost I see would be 15% US tax on dividend income (even if not paid out) and on every Pound of capital gain.

There would of course be FBAR and Form 8938 & Form 1116 filing as well as Schedules B & D to cope with so the US tax system continues to be a pain...even though UK reporting is minimised.

This is my understanding and it could be wrong. If you buy and sell shares (or anything relating to capital gains) valued in anything other than U.S. Dollars, you should also be aware of the implications of exchange rate volatility when completing Schedule D. A gain in Pounds Sterling, for example, may be a loss in U.S. Dollars on Schedule D, due to exchange rate variances at time of purchase verses time of sale. The nasty side is a loss in Pounds Sterling may result in a profit (and therefore taxable capital gains) in U.S. Dollars on Schedule D, again, due to exchange rate variances in the opposite direction. A reasonable gain in Pounds Sterling could be a large gain in U.S. Dollars, and would be taxed accordingly. If you are looking to invest in Pounds Sterling for stability, this could be a small consideration and is obviously more critical for mid to long term investing.

I avoid anything to do with the markets, so if I’m wrong on this I hope Guya will correct me.

Goodness, I'd love to invest. But I get to the end of each month and I'm happy to have made it to payday 

New Year's Resolution is to seriously look at my lifestyle and see where I can fix things!!!

The only tax cost I see would be 15% US tax on dividend income (even if not paid out) and on every Pound of capital gain.

Are you referring to the ISA here. The UK and US will both want their cut on anything outside the ISA wrapper.

There would of course be FBAR and Form 8938 & Form 1116 filing as well as Schedules B & D to cope with so the US tax system continues to be a pain...even though UK reporting is minimised.

Yes the paper work is ridiculous, let's hope reform of the tax system includes FBAR etc.

I've never liked individual shares because of their volatility and I'm not a trader. I may try to buy 10 or 20 blue chips in various sectors, but I feel that the core of my UK investments will be a 5 years savings account ladder and a few years expenses in cash as a buffer against a market crash . I've seen 5 year saving accounts at 4.75%, not great, but as interest rates have to go up at some point and I'll be able to roll into those as my ladder matures. US reporting on these should be simple as they are just interest bank savings accounts. I can play the bond and stock market in my US retirement accounts. In those I'm increasing my allocation of UK investments by buying FTSE based EFTs and European stock and bond funds. They've done badly recently which seems like a good time to get into them.

The problem I have with keeping savings in a bank account is that inflation and taxes more than wipes out any interest you might earn. You are surely losing money. Inflation looks set to rocket with all the money printing so I prefer to be in shares.

The problem I have with keeping savings in a bank account is that inflation and taxes more than wipes out any interest you might earn. You are surely losing money. Inflation looks set to rocket with all the money printing so I prefer to be in shares.

I want a safe investment in the UK so that I can ride out big currency fluctuations and market crashes. My US retirement funds are a mix of stock and bond index funds, but I want shorter term money in the UK so a series of different term savings accounts in an ISA sounds like a safe bet. I'll also contribute to a ROTH by taking tax credits for my UK taxes rather than using the earned income exclusion. One thing I intend to do before moving back to the UK is to convert as much of my IRAs as possible to ROTHs.


I'm not sure what to do with any non-retirement money I leave in the US as any capital gains they produce will be taxed as income in the UK. Maybe I'll invest them in income funds to keep the capital gains down and juice up the stock allocation of my retirement funds (not the usual thing to do) to account for that. Frankly the outrageous fees I see on UK funds are a big enough reason to avoid them quite apart from PFIC

I'm not sure what to do with any non-retirement money I leave in the US as any capital gains they produce will be taxed as income in the UK.

Perhaps I am mis-reading something, but if you are taxed on the remittance basis, aren't your US capital gains taxed as offshore income and only taxed in the UK if you remit?

I am planning to move next month from US to UK for several (under 3) years and plan to keep US mutual funds in a taxable account.  I will leave any dividends and cap gains from those funds in the US.  If I'm missing something here, please let me know.

Perhaps I am mis-reading something, but if you are taxed on the remittance basis, aren't your US capital gains taxed as offshore income and only taxed in the UK if you remit?

I am planning to move next month from US to UK for several (under 3) years and plan to keep US mutual funds in a taxable account.  I will leave any dividends and cap gains from those funds in the US.  If I'm missing something here, please let me know.

Yes, you can use the remittance basis to shield your US capital gains from UK taxation. Just keep in mind that once you hit the £2,000 threshold for total unremitted offshore income during the UK tax year (including dividends, capital gains, wages, whatever), you lose your personal allowance. In that case you may be better off using the arising basis, keeping your personal allowance, reporting the US mutual fund income to the UK and taking a foreign tax credit on your UK return for any tax paid to the US.

Yes, you can use the remittance basis to shield your US capital gains from UK taxation. Just keep in mind that once you hit the £2,000 threshold for total unremitted offshore income during the UK tax year (including dividends, capital gains, wages, whatever), you lose your personal allowance. In that case you may be better off using the arising basis, keeping your personal allowance, reporting the US mutual fund income to the UK and taking a foreign tax credit on your UK return for any tax paid to the US.

If I elect the arising basis instead of the remittance basis, don't I lose the ability to avoid paying UK taxes on non-UK workday income?