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Expat investors: Help for US and UK citizens abroad

We get a lot of questions from expats on the complexities of tax and investing as a citizen abroad. However neither The Investor nor I have any experience in this area. We’re both firmly based in Blighty.

However I have come across a few sites in my time that boast an active expat community that should be able to point you in the right direction, or at least sketch out the issues to think about.

Expats - watch out for the taxman

So this article is a simple round up of resources that may help you deal with investing while posted abroad.

It’s divided into three sections:

  • Investing and tax for UK nationals
  • Same again for US citizens
  • A general section that applies to everyone

My article is just the start. With any luck, we can crowd-source some better links once the Monevator readership has had its say in the comments below.

Indeed, I’ve already had some invaluable advice from a far-flung Monevator reader named Nigel:

Much of the expat advice available online is a thinly veiled sales pitch from service providers who’d like to charge you fees. There’s nothing wrong with paying for advice but make sure you double check the source of anything you read online. Expat forums can be cruising grounds for advisors looking for business.

My thanks to Nigel.

Note, we can’t vouch for the accuracy of any of the info linked to below. Advice inevitably dates, and some authors have a sales-related agenda.

Go careful and don’t take anything at face value.

General resources for the expat investor

  • The International Investor is the site par excellance for advice on investing in foreign brokerages and shares.
  • The Bogleheads’ forum is the Wikipedia of passive investing wisdom. One Boglehead has kindly collated a cache of links for expat investors.
  • There is plenty more expat material to be found on the Bogleheads and it isn’t just limited to the concerns of Brits and Americans on tour.
  • If you have a question about expat investing or tax issues then try searching the site using the advanced Google search term site:bogleheads.org followed by your topic e.g. double taxation treaties.
  • Monevator on withholding tax – the bane of an expat investor’s life. Our article is written from the perspective of a UK domiciled investor but the principles are the same no matter where you’re based.

Expat UK investors

  • HMRC outreach – For UK retirees leaving or returning to Britain.
  • HMRC on QROPS – The taxman’s advice on transferring your pension to a Qualifying Recognised Overseas Pension Scheme (QROPS).
  • The QROPS list – HMRC’s list of Qualifying Recognised Overseas Pension Schemes.

Expat US investors

Over to you

Remember that the basic principles of investing hold true everywhere. If you want to know how to design a portfolio or to escape the rat race then you should use the same trusted UK and US sites and books that you’ll discover through Monevator every week.

Are you an investor planting your corn in a foreign field? Please tell us about the sites or books that have helped you in the comments below, and together we’ll turn this page into a cracking resource for expats around the world!

Take it steady,

The Accumulator

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{ 40 comments… add one }
  • 1 sendaiben July 15, 2014, 10:32 am

    Andrew Hallam’s book The Millionaire Teacher and his website andrewhallam.com have a lot of info about investing for expats.

    In Japan my site retirejapan.info has some information and a small active community.

  • 2 Paul S July 15, 2014, 12:20 pm

    @TA, Hi,

    You refer to UK domiciled investors when, I think, you mean UK resident investors. These terms often pop up on blogs as though they are interchangeable. They are not. Residence is determined by where you live, domicile by where you “belong” to.

    Residence is quite easy to change; domicile is very difficult to change. For most nationalities taxation is defined by residence; not, however, for children of Uncle Sam. Even then there are exceptions…….Britons are taxed on residence except when they die. Inheritance tax is based on domicile.

    Sorry if that seems pedantic but if Monevator is going to address expat issues it is important to get that one right.

    Paul S

  • 3 Stephen G July 15, 2014, 1:01 pm

    Firstly thanks for putting a post about this subject, there are plenty of expensive options for expats, cheap ones less so – I’m very interested to hear what people have to say.
    I use TD International (based in Luxembourg ( them not me)), certainly not as user friendly or cheap as say HL, nor do they offer low cost passive funds. So I’m using them to buy Vanguard ETFs, €28 per trade and a Fee per quarter, on securities holdings 0.05%, (€15 min – €150 max). I’d love to find a cheaper solution or ideally someone that offers Vanguard lifestrategy finds.
    As a non US citizen it was recommended on Bogleheads to avoid the NYSE so I use the FTSE.
    Hope this helps.

    Stephen G

  • 4 Neverland July 15, 2014, 1:14 pm

    Do any readers of this blog have any experience of actually retiring abroad?

    Its something we have been toying with in the medium term as neither of us are actually english and the tax laws are causing problems with our pension funds

    I was actualy thinking of somewhere in the EU a few years after the UK exit referendum

  • 5 weenie July 15, 2014, 1:46 pm

    @Neverland

    I don’t know about private pensions but if you are entitled to a State Pension, then this can still be paid to you if you choose to live abroad. I arranged my grandmother’s state pension when she chose to leave the UK a few years ago. You’ll need to contact the International Pension Centre (more info: https://www.gov.uk/moving-or-retiring-abroad)

    You will get your pension paid to your bank account on a monthly basis, without the extras, such as £100 cold weather payment. Your pension will however be fixed, ie it will not increase over the years with inflation etc.

  • 6 Paul S July 15, 2014, 3:41 pm

    With ref to Weenie’s post above.

    That last comment is not necessarily true. It depends on where you retire to. Roughly speaking the pension will be frozen if you retire to one of the old Commonwealth countries……Canada, Australia, New Zealand, South Africa and some others. If you retire to most other countries including anywhere in the EU, USA etc you will still get the annual increases.

    It is one of the great injustices that neither Labour nor the Tories will rectify.

  • 7 weenie July 15, 2014, 8:30 pm

    @ Paul S – Aha, thanks for the correction – my grandmother retired to Hong Kong so as an ex-British colony, her pension is frozen.

  • 8 Martin July 15, 2014, 10:23 pm

    Neverland: what problems are UK tax laws causing for your pensions? I recently compared tax systems of various European countries and the UK was by far the most generous in general (high personal allowance, low tax on dividends, fairly generous annual CGT allowance, easy way to build up pension years by registering as self-employed, free money for pension contributions when you don’t work, free healthy insurance for everyone [important if you retire early] etc).

  • 9 Mike July 16, 2014, 3:49 am

    Thank you TA for another excellent post…. I’m a UK Expat in NZ and have found the Monevator site by far the best personal finance blog around.

    I’m hoping to spend my time in financial freedom between Blighty and NZ and while the investment options over here in the Antipodes is limited compared to UK (which in a way makes things more straightforward I suppose) it has been a headache working out what to do with my sterling, which I want to keep in sterling for my future time in the UK, but not in inflation-ravaged cash. At this stage it looks like TD Direct international is the best option with a split between the Vanguard FTSE All World ETF and UK Government bond ETFs. Unless any expats out there have alternative suggestions?

    The restrictions on UK based investing options for Expats as a result of the Anti Money Laundering legislation is a real pain.

  • 10 China Nigel July 16, 2014, 5:22 am

    QROPS (Qualifying Recognised Overseas Pension Scheme)
    I would especially like to draw peoples attention to this topic which is firmly within “Expat Investing”.
    I don’t pretend to be an expert but I would just mention:
    1. In the expat world there are many unscrupulous advisors (there are many good ones too by the way) who will take as much in fees as they can for setting up a QROPS for you. I have heard that since the last budget announcements on pensions mentioned here:
    http://www.pensionsadvisoryservice.org.uk/pension-reform/budget-2014
    that there has been a big increase in QROPS being set up. This is great news for advisors but I think this is a key part of the announcements:
    “From April 2015
    The government intends to:
    Allow members of defined contribution schemes to access their pension fund in full without the need to purchase an annuity. The tax free lump sum of up to 25% of the value of the fund will remain available with the balance taxed at the member’s marginal rate.”
    this leads onto my second point:
    2. UK Non Resident and Double Taxation Agreements
    Being an expat normally means being “non resident for UK tax purposes” BUT you need to be clear that this is in fact the case as there are clear rules that define your residence status. If you are non resident and live in a country which has a double tax agreement with the UK (and there are lots that do), you need to check the local country rules on pensions. IF the country allows pensions to be paid tax free (e.g. China) why would you want to set up a QROPS and pay all the fees that go with that? Theoretically you could just withdraw the whole amount in your UK DC pension and receive it tax free in your country of tax residence? Of course the budget announcements are not actually law yet so anything might change yet and it seems like a massive loophole to me!
    Maybe I am incorrect and would really welcome other peoples views on this.
    Anyway I would suggest that people need to think very carefully before jumping into a QROPS! As they say, do your own research!!

  • 11 China Nigel July 16, 2014, 5:38 am

    Stephen G
    Being non UK resident usually makes it difficult to open a UK based broker account with the likes of HL or Youinvest.
    In Asia I have found that Charles Schwab HK provide an excellent and low cost service:
    http://www.schwab.com.hk/public/schwab-hk-en/
    However on this occasion I do not agree with the Bogleheads about the NYSE, which offers ample choices to most people! Schwab ONLY provide USA traded securities but, as a NON US person, you need to fill out form W-8 and then withholding tax will only be as per your country of tax residence, in my case, China. This COULD be much more advantageous than your own country or indeed the USA – as always you need to check your own circumstances!
    By the way the fees for straight forward online deals are $8.95 each and no annual fees. I guess they have other offices around the world.

  • 12 Stephen Gauden-Ing July 16, 2014, 6:30 am

    @China Nigel,

    I agree with you that you can’t open HL accounts from abroad, my comment was merely comparing their website and fees to TD Intl, I have a SIPP and ISA with HL from my previous life and pay currently pay £240 a month in and HMRC tops that up to £300, (£3600 a year for up to 5 years after leaving the UK).

    Regarding the W8, when I looked into this I was baffled by some of the jargon, but understood that you are subject to 30% tax on dividends, whereas the FTSE you are not? I may be wrong, and from what I could see NYSE ETFs are cheaper than the FTSE equivalent so are a better option if you can keep clear of the IRS.

    I’ll have a look at Charles Schwab later today thanks.

    Stephen

  • 13 China Nigel July 16, 2014, 6:54 am

    Stephen G
    I did the same as you for the first 5 years but that option has expired now 🙁

    From the Schwab instructions for filling out the W8:-
    “Purpose of Form.
    This form is used by a foreign person to
    establish foreign status, to claim beneficial
    ownership of the income for which the form is
    being provided and, if applicable, to claim a
    reduced rate of, or exemption from, withholding
    as a resident of a foreign country with which the
    United States has an income tax treaty.”

    This is what Schwab say to China residents:

    “The US requires a new W-8BEN form from “non-US person” customers every three calendar years. If a W-8BEN form is not completed upon account opening and the expiration of the last one, 35% of all dividends and interest, and 28% of all sales proceeds in each transaction are subject to withholding.
    A valid W-8Ben form allows you to establish your foreign status. With a valid W-8Ben form on account; capital gains are exempt from all withholdings, and dividends and interest from U.S. securities are taxed according to the tax treaty between your country of residence and the US. (For China residents, the reduced interest and dividend withholding tax rate is 10% )”

    That 28% of ALL sales proceeds is a bit scary eh?!

    Of course the tax numbers will change according to the country of tax residence.

  • 14 Paul S July 16, 2014, 7:06 am

    @China Nigel,
    HL will open accounts for residents of some non-UK counties, mainly in the EU, I think. Most brokers insist on UK residence.

    @Neverland
    The tax systems in most EU countries are as bad or worse than the UK (wealth taxes etc).

    Cyprus and Malta are exceptions and well worth consideration.

  • 15 Jumper July 16, 2014, 8:43 am

    @China Nigel, here is a description how US taxes can work against a long-term non US-resident investor.

    Suppose you live in Singapore and want to buy a ‘developed Europe’ ETF. If you buy IEV on the NYSE this is a ‘US domiciled’ fund, meaning the US will take 30% of dividends in tax. As far as the US is concerned, IEV is just another ‘US company’. Because Singapore has no tax treaty with the US this is not recoverable, so a deadweight loss (it not available as a Singapore tax credit either, because Singapore does not tax dividends). If you hold more than $60k total in US assets and die, the US will take estate tax at rates up to 40%.

    Alternatively you could buy IMEU on the LSE or other EU exchange. IMEU is domiciled in Ireland so the US cannot take a third of your dividend (and Ireland won’t) and you avoid all entanglements with the IRS. IEV and IMEU hold the same underlying EU companies, so which you choose makes no difference to the companies you hold, but returns could differ considerably over the long term due to drag on returns from US tax.

    The above is a clear example of why one might avoid a US domiciled fund, but not all are so well defined. If you live in a tax treaty country the dividend rate is normally 15%, and if you can take that as a local tax credit it might tip the balance, especially if the US ETF’s TER is lower (note however that while many countries have income tax treaties with the US, only a very few have estate tax treaties). Also where the fund invests matters. If it holds US stocks then the fund may have to pay US tax on the dividends internally anyway; this should show up in the TER.

    Bottom line: consider the TER, the US (or other) country dividend withholding tax, and any local tax credit availability when deciding on which ETF to buy to cover a given geographic region. Also, don’t forget US estate taxes if your holdings exceed $60k, and bear in mind that the tax and regulatory environment in the US is generally hostile to anyone not in the US (google FATCA for more).

  • 16 Stephen Gauden-Ing July 16, 2014, 1:47 pm

    @ Mike

    Having read Investing demystified by Lars Kroijer, I’m doing the same. It feels almost too simple, but I like his arguments, low trading costs and limited need to rebalance global exposure,.

    @ Jumper

    Thanking you for post, I’ll give Uncle Sam a wide berth.

  • 17 Neverland July 16, 2014, 2:43 pm

    @Martin

    Life time allowance

  • 18 Neverland July 16, 2014, 3:05 pm

    @ Paul S

    I had identified Malta and Gibraltar as being possibilities

    I had ruled out Cyprus on the basis that the recent bank account confiscation wasn’t going to be a one-off when the country is nearly bankrupt

  • 19 The Accumulator July 16, 2014, 7:52 pm

    @ Paul S – I was ignorant of the difference between residence and domicile. Thanks for bringing me up to speed on that one.

    @ all – thank you for your excellent contributions. Am enjoying the thread and dreaming of retirement in sunny climes.

  • 20 China Nigel July 17, 2014, 2:02 am

    @Jumper,
    Excellent response, thanks!
    As I said, and you have also identified, it is very important to consider your own local situation.
    Everywhere has its good and bad points and, in my case, China is no exception. Mainly due to security of my funds I would not want to use a local broker of any kind. Sorry to any Chinese readers but the “regulatory” environment here is very undeveloped and scary!

  • 21 China Nigel July 22, 2014, 5:59 am

    For those of you that have UK non resident for more than 5 years and are 55 or older this might be of interest:
    http://www.hmrc.gov.uk/manuals/eimanual/eim74052.htm
    This potentially means a tax free flexible drawdown of any amount after April 2015….
    Too good to be true??

  • 22 Marc October 12, 2014, 11:46 pm

    I’ve been abroad for about 12 months (UK National) and have found that as long as you file your tax return and claim all CG / income it’s pretty straight forward. Not too indifferent to doing it in the UK

    Marc,
    http://brokernotes.co

  • 23 Falco7 January 27, 2015, 5:02 pm

    Hi All,

    Apologies in advance for the super long post. Scratching my head was not yielding results so I have decided to go direct to the best source of information I can think of – the Monevator crew.

    I’m a veteran 2-year Monevator reader. As such I’ve seen the light and fully converted to the passive investing / FI-chasing lifestyle and have a couple of years worth of ISAs tied up in Vanguard LS 100% (acc) and also some SIPP investments in the same. My wife is fully on board and has similar investments as does my infant son who has a J-SIPP and J-ISAs of his very own. All our investments to date are in funds, not ETFs. This was because we have put in money regularly over time and it seemed to have the lowest transaction cost. I started off with Hargreaves Lansdown but after scrutinising the compare brokers page for a very long time around RDR-time, we shifted over to interactive investor. We’ve been extremely fortunate to work in the financial industry for several years and so are able to fill up the ISAs every year and put into the SIPP and contribute to my workplace pension where my employer pays in 12% of my salary. I had a 4 year stint working in Dubai which helped me pay off my first mortgage before I moved back to London about three years ago. In short, I had what I thought was a decent plan to save, invest and sail off to FI before my 50th birthday (currently 37) and was well on track to hit this goal.

    Now both I and the missus are moving to Singapore with our firm. Overall this is going to hit turbo boost on the FI plan. The retire at 50 plan has gone out the window and our new target is 5-6 years to FI. We’re hoping it will be the expat dream come true. Go overseas, pay low taxes, live well but without undue waste and save save save. I wish I had this attitude and the wonderful advice of Monevator when i first went to Dubai but at the very least I did pay my mortgage off (in retrospective, this was actually stupid as the mortgage interest was offsetting nicely against tax but at the time I had a strange burning desire to pay the damn thing off).

    Once i’m non resident for tax, I’ll have UK income in the form of rental income on our London flat. We will bust our combined personal allowances so the remainder would be taxed at 20%. This part is straightforward. ISAs, SIPPs, workplace pensions etc. will all just be effectively frozen with no new cash put in while we are abroad and these investments just tick along without incurring any taxable gains anyway.

    Finally i get to my question/s…

    THE GOAL:
    With no more mortgage liabilities and income taxed at low Singapore rates, we will be putting aside substantial amounts each month and once each year at bonus time. All UK based preferential-tax-treatment type investment vehicles such as SIPPs, UK workplace pension, ISAs etc. will be off limits to us. All we want is to be able to plough money into either Vanguard lifestrategy (although we will probably go for 80% in the future), OR a combo of a low cost global equities fund plus a low cost short tenor high rated bonds fund. We’re not into fancy asset allocation and want a simple solution. We would be open to going the ETF route here as we can make larger investments less frequently than in the past so hopefully would be cheaper than funds’ OCFs.

    PROBLEMS/QUESTIONS
    How do i invest?

    One idea which I can already see issues with is to convert money into GBP (i would get a very competitive, better than retail, fx conversion from my employer), remit to the UK and then invest in a normal (taxable) account. If we continue to buy accumulation units, then we wouldn’t pay any income tax on dividends, however (not being a tax expert mind you), assume we could be building up capital gains liabilities over time. We do intend to come back to to live in Blighty one day.

    Alternatively, we would keep funds denominated in SGD and invest locally. no idea through what platform / what funds are available.

    Or we could convert to GBP then invest locally. As mentioned, the fx conversion would be pretty good and eventually we do want to have our funds in GBP for retirement.

    Seeing as we love Vanguard so much (who doesn’t?) it would be the most amazing solution if we could invest direct with them some way. I have seen it said that they will deal direct for investments over £100k. We could swing this but my research has come up empty on how to follow up with this idea. Vanguard don’t have an obvious link on their site saying “click here to avoid those nasty platforms”. If only there was an e-harmony for index investing…

    Stepping out of the warm embrace of the British financial system, I also have other worries…

    How can i trust overseas platforms (what to check for?)

    US taxation! I have seen enough about W8, FATCA etc. to know investing directly in US domiciled funds/exchanges is a big no-no.

    Luxembourg / Irish domiciled funds/ETFs… any good? what pros/cons?

    What should I be aware of regarding taxation on investments both while I am living abroad and when I come back (i.e. the capital gains pitfall mentioned above).

    Maybe there are more pitfalls I’m blissfully unaware of.

    Thanks in advance for any comments/ advice.

    Falco7

  • 24 China Nigel January 28, 2015, 12:28 am

    Falco7,
    Big comment and it’s late where I am at the moment but as an expat myself I can give you a few quick points:
    – I believe you can still pay into your SIPP for some time after you become non-resident for tax purposes, you need to check this.
    – USA investing is not that frightening once you understand the rules, mainly that you need to fill out a form to show that you are not a USA citizen, the W8 that you mention. Once non resident UK platforms outside your SIPP won’t be able to take your investments. I did a lot of research and found Charles Schwab to be an excellent low cost choice out of Hong Kong, maybe they also have a Singapore office. Schwab only deal in USA exchanges as I recall, that will include the excellent Vanguard.
    There are lots of other things to discuss in your note but I would leave you with one important point, DO NOT GET INVOLVED WITH LOCAL “FINANCIAL ADVISERS”! Once there you will regularly be approached, a polite decline of all is recommended!
    Good luck!

  • 25 Falco7 February 3, 2015, 3:15 pm

    China Nigel,
    Thanks for the advice. I read Andrew Hallam’s new book on expat investing and he definitely agrees with your warning on local financial advisors. It also had some pointers on Singapore-specific factors which was pretty helpful. Its called The Global Expatriate’s Guide to Investing. I can’t link to it as for some reason my office internet filters say NO but its easily found. I will check out Schwab once i’m in-country. Hallam also recommends SAXO.
    Best Regards, F7

  • 26 Stephen G February 11, 2015, 9:47 am

    Hi Falco7,

    Sorry for the slow reply, been on holiday spending money rather than investing it.

    You and your wife are entitled to put £3600 Gross PA for 5 years into a UK SIPP after you leave the UK, i.e. £240 pm net per person.

    One thing that Vanguard’s competitors offer that Vanguard doesn’t is ETFs that accumulate dividends, but this is not on US domiciled ETFs.

    Contrary to my earlier post TD International now offer Vanguard Funds as well as ETFs, but not the life strategy option. Their funds also have a slightly higher OCF/TER than their ETF equivalent but no transaction cost.

    Lastly, and this is not exclusive to expats, check what benchmark you are tracking:

    All world ETF (VWRL) – FTSE benchmark – 2800+ stocks – TER 0.25%

    v

    Global Stock Index Fund – MSCI benchmark – 1600+ stocks – OCF 0.3%

    Stephen

  • 27 two shillings and sixpence September 11, 2016, 9:05 am

    Hi All

    A question that someone out there maybe able to help with.
    Has anyone experience with making contributions to a SIPP while working overseas. The pension advisor service indicates that you could however when i tried with Bestinvest they indicate that it is not allowed. I am not concerned with tax relief on my contributions but like the SIPP. I have been out of the uk for more than 5 years so i am not longer able to contribute to an ISA

    Pension Advisor Service
    “You’re now allowed to be a member of a UK registered pension scheme regardless of where you live or where your employer is based. ”

    Any ideas

  • 28 Ed August 12, 2017, 11:09 am

    There are now a few robo-advisors popping up in Singapore! Only open to those working or resident in Singapore – I would say it’s nearly at par with DIY given the extortionate dealing fees and forex fees brokerages here impose, but the investment strategy sounds a little to smart-beta-ish for my liking:

    https://www.smartly.sg/
    https://www.stashaway.sg/

  • 29 Frustrated Nerd Dragon December 29, 2018, 9:46 pm

    Might be worth an update. The big investment platforms are now refusing to have accounts from anyone even temporarily living in the US or not UK resident. Not pleasant for those who find themselves with nowhere to go when they’re only away from the UK for a few years (on a student visa in a close relative’s case) and all providers are saying no.
    So much for trying to do the right thing and opening a SIPP and FIRE ISA at 21 when it’s being forced to sale only a few years later.

    If anyone has any suggestions, I would love to hear them. This is draconian although I understand the commercial risk situation.

  • 30 The Investor December 30, 2018, 11:50 am

    @Frustrated Nerd Dragon — (Great name! 😉 ) Unfortunately I don’t have any insight onto this, but it’s something we get emails from pretty regularly so you’re definitely not alone. Perhaps we can try contacting the various brokers and hearing their side of the story. At least we’d be able to understand if it’s a legitimate response, a commercial decision, or an over-reaction.

  • 31 two shillings and sixpence January 12, 2019, 9:58 am

    Would be very much interested in an update on this topic

  • 32 The Investor January 12, 2019, 10:48 am

    @T.S.A.S. — We get a lot of comments/requests on this, but the problem is we’re very poorly placed to answer or update on the subject since we’re all 100% UK domiciled investors. Even if I found an ex-pat contributor, s/he’d likely be in just one country, and there are as you know differences depending on where you are. (E.g. Pension treaties). It’s frustrating.

  • 33 two shillings and sixpence January 13, 2019, 10:05 am

    @The Investor
    Yeh i understand. There are so many variables. Type of account ISA, SIPP, Investment or even a bank account.
    If the account was opened before you moved. Where you move to USA, within the EU or outside. It seems to be further complicated by whom you talk to within the organization with different people been given different advise but this maybe due to so many variables.
    At a point your nearly afraid to explain your situation in fear of being told to close you account.

    @Frustrated Nerd Dragon I though at least you would be allowed to keep you account but not allowed to add more funds.

  • 34 Bluejeansman March 8, 2019, 6:51 pm

    Been doing a bit of research on this myself. UK resident and naturalized UK citizen for a long time and considering relocating to India. My situation is that my move to India may or may not be permanent. Not sure yet. I want to maintain my financial assets (dealing account, ISA, SIPP) in UK. At the very least, I don’t want to be kicked out and forced to sell everything, trigger a huge CGT or SIPP penalty. Well, I could move my SIPP to India via QROPS but my move is not that permanent (yet).

    Ideally I would like to be able to keep my accounts, be able to login, rebalance between my various UK funds/ETFs say once a year.

    India is also a bit difficult in tax treatment of foreign funds. India is ok with foreign mutual funds/OEIC with long term CGT at 20%. But India does not “recognize” the tax sheltered aspect of UK’s ISA and private pension. I dont mind this so much since I dont plan to sell much anyway, and I am ok to pay taxes on dividends generated in my ISA/SIPP. Accounting might be a mess …

    So, coming back to UK providers : Did some research on UK online brokers that might be useful to you all.

    *) Legal and General : They were okay with allowing non residents to continue to maintain the L&G account , buy sell etc. Havent checked with them recently

    *) Alliace Trust : you can maintain your accounts, sell your OEIC/ETF. But you cannot buy any new OEIC or additional units of OEIC you already hold. Shares and ETFs are fine to buy. But I am unable to trust them, since they have given me inconsistent info on the same subject when I wrote to them over the last several years

    *) Alliance Trust is getting bought out by I.I. and I remember I.I. telling me a few years ago “No non residents”, so after the acquisition, I guess ATS will force non residents to get out. You could call ATS about this today but its no use. I have found that they dont keep their word. For example I have it in writing from 2 different Heads of Compliance at Alliance Trust over the last few years telling me that after I become non resident, they will allow me to do a switch between my existing Vanguard OEIC holdings, but now they are flat out denying and saying they will not allow that. Then I asked them when the rules changed and they have no answer.

    *) HL : These guys are great ! They have given me complete freedom to buy/sell whatever I want, even after I become non resident. But they charge 0.45% for OEIC, so ETF might be an option. For ETF they only charge £45 max (maybe higher for SIPP, not sure).

    *) Vanguard UK : They are ok with me maintaining the account and selling, my OEIC, but they wont let me buy anything once I become non resident.

    *) My employer pension provider Aegon seems very good. I could maintain my pension with them, and switch on “sipp” functionality (whatever that means) once I leave. But apparently there is quite a bit of freedom even after becoming non resident. Platform charges are 0.4% upto £250K. I will probably go for their default “universal balanced fund” which has 60% stocks, 40% bonds, and is 75% tracker based. The fund expenses are 0.1%. But they wont kick me out.

    I am going to call other providers and will try to update here

  • 35 Bluejeansman March 8, 2019, 7:16 pm

    Frustrated Nerd Dragon, I believe UK financial institutions are refusing to open accounts for “US persons” because of FATCA (see wikipedia). Apparently the onus is on these providers to report assets and other details of their “US person” customers to the US Internal Revnue Service. Why would the UK financial institutions go thru so much trouble, it is easier for them to refuse US person customers. Yes its completely crazy, but the problem was started by the US with their draconian FATCA rule.

    This is not so much of a probem for US green card holders / citizens tho’ who happen to live in UK : So instead of investing in UK ISA, etc, they would invest back home in the US. The US has some of the lowest cost and tax efficient passive investment options (TSM, muni bonds come to mind), so a US citizen based in the UK can easily invest back home efficiently. Even tho such a person would be non-resident from US standpoint, US financial institutions such as Vanguard/Fidelity/Etrade US will not restrict them from buying / selling whatever they want. And US citizens are supposed to report their worldwide income and pay US taxes even after becoming non resident from US so it makes sense for such “US persons” to invest back home.

    But it is indeed frustrating for someone who doesnt actually have any permanent ties to the US but being classed as a “US person”. I sympathize with you on this.

    In this era of global mobile careers, I guess passive investment is not really an option ? No wonder people prefer property so much as an investment. All my globally mobile friends and colleagues equate “investing” with “property investing”.

    I wondered what the wealthy do. We have had a few major UK politicians relocating to the the US, right ? I guess the answer is private banking or wealth managers.
    – basically, part of the problem is also due to our DYI approach. I checked with a wealth manger in UK (1% mangement fee, 0.5% wrap platform charges plus actual fund (mostly trackers) expenses) and he said that so long as I dont end up in the USA, there is no problem at all. Even after permanently leaving the UK (to say India in my case), since the money will be managed by the wealth manager, there will be no issue with buying or selling any UK unit trust OEIC/ETC etc. I havent checked with the likes of nutmeg because I dont know how long the likes of nutmeg will exist.

  • 36 Bluejeansman March 9, 2019, 9:13 am

    Staying on the same subject, I also wanted to add that relocating from US to UK was pretty good. It probably helped that I did not have a US green card / citienship, so I was not a “US person” after I moved to UK. I was able to open ISA, dealing account etc in the UK. Furthermore, I was not liable to pay taxes to the USA on my UK investments since I dont have a US green card / citizenship. I do file W8-BEN on my US investments and that is straightforward. So let me tell you that side of my story.

    So, basically, I used to live in the US in my past life and I still have 401k, and taxable investments in the US. But never got a green card or citizenship.

    So far as US financial institutions are concerned, they have been very flexible (unlike UK financial institutions) in spite of me not being a US resident or green card holder/citizen. Only TD Ameritrade USA kicked me out one fine day. ETrade US, Vanguard US (I have taxable, IRA, Roth IRA with them) and Fidelity US (where I have my IRA) have allowed me to maintain my account and buy ANY US mutual funds or ETF I want. Very flexible. [In US, IRA is like our SIPP and Roth IRA is a bit like our ISA ].

    I am lucky to be in the UK, because UK HMRC recogizes the tax sheltered aspect of the US IRA and Roth IRA. UK also does not tax a “Roth conversion”. On my US taxable accounts, there are a few good ETFs (The Vanguard Total Stock Market index : VTI, being one, doesnt get much better than that) which are considered by UK HMRC to have “distributor status” so I get favourable tax treatment just as if I bought UK OIEC or UK ETF.

    Why do I still keep money in US ? Long story. There were some tax implications from my non dom days (pre 2008). Dont want to digress.

    I am even thinking that once I go to India, if the UK financial institutions make my life dificult by practically freezing my accounts from buying anything and if they force to sell/close out, I could move my money over to the US and invest in US passive funds / ETF. USA welcomes foreign investors. no problem at all. Alternatively I could also move my money to India, but I am not sure you can buy passive world trackers sitting in India. Also not comfortable with the rules and regulations in India to protect investors. India’s bank deposit insurance is only about £1000, a fugure that has not been updated by the govt beureucrats in 50+ years. The US SIPC insurance is pretty darned good, much better than UK.

  • 37 two shillings and sixpence March 10, 2019, 9:28 am

    @Bluejeansman
    Have you tried Charles Stanley Direct. Might be worth a try once you open your account before you leave.

    Linked with a trading account is keeping a bank account open in the UK when you move. Have you looked at this.
    Will you have a postal address in the UK you can continue to use.

  • 38 Bluejeansman March 10, 2019, 11:02 am

    Two shillings and sixpence, thanks. No I havent called Charles Stanley Direct yet. I do plan to inquire from all the providers listed in Monevator’s blog “compare-uk-cheapest-online-brokers”.

    The way I am thinking right now is : break my Dealing account and ISA money between 3 providers :
    1.ETF bassed portfolio with HL (who did seem to offer complete freedom – buy / sell whatever even after I become non resident) – ETF because OIEC would cost me 0.45% with HL. I do need to check with them about this freedom again.
    2. But I prefer OEIC (esp Vanguard global all cap fund vs VWRL ETF) , so stash a bit in ACC units with Vanguard UK. (Acc units means no cash generated so I dont need to buy anything new). Vanguard UK will allow me to keep the accounts and sell BUT no buying
    3. Do the same as 2 but with Alliance Trust. As of now, ATS have said I can buy ETFs but who knows ?

    wont worry too much about rebalancing : I can either rebalance on (*) HL part of my portfolio with the flexibility they are offering or (*) my US side of the portfolio where I have total freedom and 3 providers or (*) UK Aegon pension/SIPP

    Splitting between multiple UK providers is for redundancy just in case of them screws me over and asks me to pack by bags one fine day.

    prolly keep the pension with Aegon itself, more redundancy. My UK net worth is approaching 7 figures, so prefer a bit of peace of mind rather that cost as bottomline. Aegon seems flexible too.

    I guess I could go to a wealth manager (spoken to Blackstone and Sapienter, both sound very professional and use Vanguard ETFs and Dimensional Funds (that Gene Fama Nobel laureate aproaach thing – factor investing as they say in US), but at 1% fees and this silly custodian (likes of Transact etc) fees of 0.5% plus fund expenses, it starts to add up. But this would give me sound sleep – they will not kick me out for sure. Maybe if all three UK providers kick me out one day, then I will book an urgent flight to London and meet these wealth managers 🙂 [ There is after all a pattern of dodgy Indian businessmen fleeing India and suddenly showing up in London. Sorry, bad example, I definitely dont want to be one of those 🙂 ]

    But yes, let me talk to Charles Stanley. Thanks for the suggestion. My UK banks Lloyds and Barclays are ok with me keeping my savings account with them after going non resident, even without UK postal address.

    I dont plan to have a UK postal address after leaving. I dont have relatives in UK. Is it legal to use a friend’s address ? What about UK tax liabilities once you say you have a “postal address” in UK ? As of now, UK does not tax non residents. So after moving out, I will not need to pay tax on my UK dividends. I will of course need to declare and pay the taxes in India (India taxes residents on worldwide income). To be honest I am ok with paying taxes to UK AND India, as the countries have double tax agreements, but the tax admin work will get very messy for me – since I have a US angle as well – fun fun 🙂

  • 39 two shillings and sixpence March 11, 2019, 8:59 am

    @Bluejeansman
    I understand that some UK bank will ask you to close your account if your non resident and it can be a real pain opening a bank account from scratch.
    This may have changed as the work force becomes more global moving around.
    As you have said you have checked with your banks so this should not a problem.

  • 40 two shillings and sixpence March 24, 2019, 1:45 pm

    @Bluejeansman
    Would be interested to know if you found other platforms that will allow you to continue trading when you move outside of the UK

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