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The American

You've moved to the UK – Now what? By Andrea Solana

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s an American living in the UK, almost nothing related to your financial affairs is easy. The consequences of seemingly simple decisions – such as how to pay for a new home or purchase a mutual fund - may create unnecessary tax charges and complexities. There are a number of key milestones that occur, from the time you arrive in the UK to the time you potentially approach and reach retirement. Many of these changes will impact the appropriate wealth management strategies for American expats. Understanding how rules will change for you over time will allow you to plan ahead and make prudent financial decisions. We begin these series of articles with some initial considerations for your first three years in the UK. As long as you live in the UK, you will be dealing with taxation in two jurisdictions and it is important to gain an understanding of how the UK and the US tax systems interact

16 March 2015

with one another. It is true that a Double Tax Treaty exists between the two countries but this does not mean that all types of income or all tax-advantaged savings methods and accounts are treated the same way. Therefore, as you settle into your new life here, you should begin to familiarise yourself with the similarities and differences. Gaining a high level understanding of the tax traps to be aware of will help you avoid making detrimental financial decisions without taking advice first. If your work in the UK will take you on frequent foreign travel, there may be opportunities to exclude some of the foreign earnings from UK taxation if your employer pays your salary into an offshore bank account and you do not bring the foreign earnings onshore. If you think this might be applicable for your individual situation, you should seek advice from a US-UK tax adviser on the specific steps to

take to ensure you do this correctly. The UK and the US also have different tax years. The US follows a calendar tax year and the UK tax year runs from April 6 to April 5 each year. Staying organised and keeping good records of all financial transactions that take place will inevitably make your life easier when tax time comes around. As you can never be certain whether your move to the UK is permanent, you should take steps to maintain good credit standing back home in the US. This can be useful both for your visits back home and, more importantly, if you decide to return permanently. Keeping your US credit active may be as easy as using your credit card to pay for your Netflix account each month. However, keep in mind that whilst you are in the UK, if you use US dollars to pay for something it may be considered a remittance for UK tax purposes. Lastly, as you settle in, subscrib-

The American March 2015 Issue 741  

The American has been published for Americans in Britain since 1976. It's also for Brits who like American culture.

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