Investing across borders presents unique challenges and opportunities for US and UK expats trying to navigate two different tax systems while optimizing their investment returns.
• Understanding the US-UK tax treaty helps prevent double taxation
• US expats must comply with strict reporting requirements for foreign assets (FATCA and FBAR)
• PFICs (Passive Foreign Investment Companies) present a major tax trap for US citizens
• PFIC investments face punitive tax treatment with ordinary income rates up to 37% plus interest charges
• UK reporting funds offer tax advantages for UK taxpayers through simplified reporting and capital gains treatment
• The ideal cross-border investment strategy uses US-registered funds with UK reporting status
• Low-cost passive index ETFs provide cost efficiency and simplicity compared to actively managed funds
• US-based brokerages often offer significant cost advantages over UK platforms
• Strategic asset location places tax-inefficient investments in tax-advantaged accounts
• Diversification across US, UK and global markets helps mitigate country-specific risks
• Currency fluctuations between USD and GBP affect returns independent of investment performance
• Certain UK pension schemes may offer tax benefits recognized by both countries
Ask yourself which specific part of this cross-border puzzle feels most relevant or concerning for your situation, and consider digging deeper into those areas that affect you personally.
