Americans in the UK: investment options

Financial Advice for US citizens based in the UK or holding a green card

U.S. persons often face challenges when trying to open investment accounts in the UK due to a combination of U.S. and UK financial regulations.

Edale is a financial adviser firm that can assist with overcoming these pains and help everyone from the chief executive of a plc to a shopkeeper. We ensure financial advice and options are available to everyone, irrespective of their citizenship or complications created for them. Our specialist International advisers have significant experience in advising US connected individuals living in the UK on their tax and financial affairs.

We are a financial advisor here to help with pensions and tax-efficient savings plans that are US and UK tax compliant.

We can offer US persons pensions and tax-efficient savings through Edale financial advice service. 

Complications Americans face with savings and investments in the UK

FATCA Compliance: The Foreign Account Tax Compliance Act (FATCA) requires foreign financial institutions to report the financial information of U.S. persons to the IRS. Many UK banks and investment firms may find these reporting requirements onerous, leading them to be hesitant or even refuse to open accounts for U.S. persons.

Regulatory Burden: The compliance costs and regulatory burden associated with servicing U.S. clients can be high for UK financial institutions. This includes the need to understand and adhere to both UK and U.S. regulations, which can be complex and time-consuming.

Tax Reporting Requirements: U.S. persons are subject to U.S. tax on their global income, including any income from investments made in the UK. This requires them to file additional tax forms and potentially pay U.S. taxes on their UK investments, complicating their tax situation.

Risk of Dual Taxation: While the U.S. and UK have a tax treaty to prevent double taxation, navigating the treaty can be complex. There’s a risk of dual taxation if the investor does not correctly manage their tax liabilities in both countries.

Limited Investment Options: Some UK investment products may not be suitable or available to U.S. persons due to either U.S. or UK regulations. For instance, many UK-based mutual funds are considered Passive Foreign Investment Companies (PFICs) under U.S. tax law, which can lead to unfavorable tax treatment for U.S. investors.

Banking Policies: Individual banks or investment firms in the UK may have their own policies that restrict services to U.S. persons. These policies might stem from the institution’s risk management strategy, where they may view U.S. clients as high-risk due to the aforementioned regulatory complexities.

Exchange Rate Risk: Investing in a different currency can introduce exchange rate risk. Fluctuations in the GBP/USD exchange rate can affect the value of the U.S. person’s investments in the UK.

Cultural and Practical Barriers: Differences in investment culture, market practices, and time zones can also pose practical challenges for U.S. persons managing investments in the UK.

Investment options we can offer Americans in the UK

Edale can advise a wide range of tax-efficient wrappers

• General Investment Account (GIA): Enables clients to hold a very broad range of investments including some which may not be held within other wrappers, usually for tax reasons.
• Individual Savings Account (ISA) (Cash and Stocks & Shares): Enables clients to invest in cash, equities and collective investment schemes and receive certain returns tax free.
• Junior ISA (Cash and Stocks & Shares): Enables clients to invest in a tax efficient way on behalf of a child.
• Lifetime ISA (LISA): Enables clients to save in a tax efficient manner and attract bonuses for the long term but includes an option to use funds for the purchase of a first home.
• Personal Pension: Enables clients to save in a tax efficient way towards retirement.
• Self-invested Personal Pension (SIPP): Enables clients to save in a tax efficient way towards retirement.

Our Happy Clients

Financial advice that solves your needs

Edale focuses on supporting individuals as unique as they are. We do not put people in boxes.

Product to suit your residency and citizenship

We can advise a UK personal pension plan and individual savings account that is designed especially for holders of US Passports.

Flexible amounts with no minimum

We advise clients of all sizes and wealth. From the shopfloor to the boardroom. There is no minimum despite being in a unique situation.

US tax efficiency for UK pension savings

The UK + US tax treaty, recognises a self invested personal pension (SIPP) as a ‘pension scheme’ in the US (like a 401(k) qualifies as a "pension scheme").

Tax relief on contributions

Get 25% basic tax relief on personal contributions and highrate relief through seld assessment

Tax free cash on retirement

On retirement get 25% of your UK pension paid as a tax free pension lump sum. A tax treaty exempts the 25% tax free lump sum from being taxable in the US

Invest in compliance with UK and US rules

Few pension providers and tax-free savings accounts allow US citizens. We can advise you and ensure tax efficiency. Everyone's needs are different so to discuss your case call us or message us.

Using an Adviser vs Doing it Yourself for US person investing

Hybrid advisers offer a blend of automated and human financial advice, providing a comprehensive approach to managing investments like an American child's Individual Savings Account (ISA) in the UK. This approach contrasts with a do-it-yourself (DIY) strategy, where individuals manage their investments without professional advice. Here are several benefits of using hybrid advisers over a DIY approach for an American child's ISA:

Personalized Advice

• Tailored Strategies: Hybrid advisers provide personalized investment advice based on the child's and family's financial situation, goals, and risk tolerance, ensuring a tailored approach that a DIY strategy might not accurately replicate.
• Cultural and Regulatory Insight: For American families in the UK, hybrid advisers can navigate the complex tax and regulatory environments of both countries, optimizing savings and investments in compliance with laws such as FATCA (Foreign Account Tax Compliance Act).

Cost Efficiency

• Lower Fees than Traditional Advising: Hybrid models often come with lower fees than purely human advisers, making professional advice more accessible while offering better value than some DIY platforms that might incur higher transaction or management fees.
• Economies of Scale: Automated components of hybrid advising can manage investments more efficiently, passing on cost savings to clients.

Expert Management

• Professional Oversight: Human advisers can oversee the automated investment decisions, intervening when necessary to adjust strategies due to market changes or life events, providing a level of oversight and security that DIY investing lacks.
• Diversification and Risk Management: Hybrid advisers can help construct a diversified portfolio tailored to the long-term growth potential suitable for a child's ISA, using sophisticated algorithms and professional expertise to manage risk.

Convenience and Support

• Time-saving: Managing investments can be time-consuming, especially with the added complexity of cross-border regulations. Hybrid advisers can save families time, allowing them to focus on other priorities.
• Ongoing Support: Hybrid advisers offer a mix of automated tools and human interaction, providing educational resources, regular updates, and the ability to answer questions or adjust goals, which is particularly beneficial for those new to investing or with complex financial situations.

Technological Advantages

• Adaptive Algorithms: The automated portion of a hybrid service can continuously monitor portfolios, making adjustments as needed to align with investment goals and market conditions, a task that can be challenging and time-intensive for DIY investors.
• Access to Advanced Tools: Hybrid models provide access to sophisticated investment tools and analytics that might not be available or easily understood by the average DIY investor.

Emotional Objectivity

• Reduced Emotional Bias: A common challenge with DIY investing is the risk of making emotionally driven decisions. Hybrid advisers can help maintain objectivity, making decisions based on data and long-term strategies rather than short-term market fluctuations or panic.

In summary, while DIY investing in an might appeal to those with investment expertise or a strong interest in hands-on management, hybrid advisers offer a compelling mix of personalised advice, cost efficiency, expert management, and convenience. This approach can be particularly advantageous for American expats navigating the complexities of saving for their children's futures in the UK.

Article for US Citizens living in the UK and planning their finances

• Calculator to answer "Do I need to report my ISA to the IRS?"
• Financial planning for families in the UK with American connections
• ISAs for U.S. Taxpayers in the U.K: A Comprehensive Guide

Contact edale easily

Book an appointment