Your UK bank accounts, ISAs and other UK-based investments and holdings: what are the implications when you move to the US? On top of this, US states apply their own income taxes: living in New York for instance, will add a further 9% to your income tax rate. In the US, the top federal rate is 37% (applying to income for an unmarried individual of over $500,000). ![]() Firstly there are the federal rates, which as in the UK, are tiered. The second difference is that the US operates two layers of income taxation. US tax regime vs UK tax regime: the US federal and state income taxes London-based US tax adviser Scott Barber of Buzzacott sounds a warning: “unless you want to live in the US permanently, why would you want a green card? Why would you want to become a US person? That’s the point at which you get sucked into the rules and regulations which can become very difficult and onerous.”īear in mind that when you eventually come home, you may remain tax resident in the US for a period of time depending on the number of days’ presence you had over the previous three years. You can read more about what constitutes a “US person” in our guide to tax and investments for US citizens and residents, here. The exact IRS rules are tricky, involving average numbers of days during which you are resident across periods of several years. What constitutes “resident”? If you are moving to the US for full-time employment, you are likely to meet the requirements of the Substantial Presence Test. ![]() If you become resident, but not a citizen or green card holder, the IRS will generally treat you as it treats a US citizen only whilst you remain resident there. if you become a US citizen or a green card holder in the US, your worldwide income becomes subject to US taxation – even if and when you return to the UK or move to another country in future. US tax regime vs UK tax regime: if you become a “US person” you are likely to have to file returns to US authorities – reporting on your worldwide income and assets There are several key differences to get to grips with. Tax in the UK is relatively simple compared to the US’s tax regime. But with careful planning the impact and cost of the latter can be reduced.īecoming a US resident? Beware – it can impact on every aspect of your financial life It’s also likely to complicate your financial and tax affairs. Taking up residence in the US is likely to involve major cultural, social and other changes for you and your family. That alone can be significant where capital assets are involved and, for US reporting purposes, you may report a mix of outright market value change, as well as changes arising from the movement of currencies. ![]() It is important to understand that the US operates a calendar tax year and all reporting has to be denominated in dollars. And what about your UK home? Decisions you make now regarding whether or not to sell your property or rent it out, could have tax consequences in the future. We look at how the status of your existing UK assets – ISAs, work pensions, SIPPs, and other investments – might be affected following your move. The following guide sets out some of the key considerations relating to your finances. Schroders invited Scott Barber, Partner at London-based tax specialist Buzzacott, to talk about the considerations a British national has to consider when moving to the US. Are you a UK citizen planning to live or work in the US? If so, you join a group of over a million Britons who’ve made this move and who, as a result, have to comply with USA’s demanding tax regime.
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