We explore the complex world of investing as an expat moving between the US and UK, breaking down the crucial strategies for navigating two different tax systems while optimizing returns.
• Core challenges include understanding the US-UK tax treaty to avoid double taxation
• US expats must avoid PFICs (most non-US funds) due to punitive tax treatment up to 40.8% plus compound interest penalties
• UK reporting funds offer simplified reporting and potential capital gains treatment for UK taxpayers
• Optimal strategy: focus on US-registered funds that also have UK reporting status
• Low-cost passive index ETFs typically outperform active management, especially after fees
• US brokerages often offer significant cost advantages with potential zero commission trading
• Strategic asset location matches investments to appropriate account types for tax efficiency
• Currency fluctuations between dollars and pounds create an additional layer of investment risk
• Certain UK pension schemes may offer tax advantages recognized under the US-UK treaty
• Professional tax advice is essential before making significant cross-border investment decisions
We'd love to hear which aspects of cross-border investing most affect your situation and what topics you'd like us to explore in future episodes.
More info at Investing in the UK as a US Expat: A Smart Approach
