Citizens of
the USA

US citizens living in the UK face several challenges when it comes to investing in the UK, from IRS and HMRC dual reporting requirements to conflicting tax considerations. This is largely because the US taxes the worldwide income and capital gains of all US citizens regardless of where in the world they live and the tax wrapper they may have used to invest within.

Investing in UK or offshore products will cause a US citizen to fall foul of the IRS’s Passive Foreign Investment Company (PFIC) rules, meaning any annual investment growth could be aggressively taxed.

Even simple UK products such as ISAs are not protected from the PFIC rules!

It is therefore important for anyone who is a US citizen to consider their investment strategy and ensure that it complies with the PFIC rules.  At KWM, we can introduce you to a specialist company who can ensure that our clients’ investments are custodied in the US and can assist with compliant investments, as well as IRAs and 401Ks.*

Positively, our current understanding at KWM is that UK pensions are not caught up in the PFIC rules.

This is a complex area, and if you would like to find out more, please contact us.

* These services are separate and distinct to those offered by KWM Wealth or St. James’s Place.

The levels and bases of taxation and reliefs from taxation can change at any time. Tax relief is dependent on individual circumstances.

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