Comprehensive Financial Planning For UK Expats In The US
Relocating from the UK to the US comes with a range of financial questions.
How can I best structure my financies?
What happens to my investments in the UK?
Can I move my UK pensions to the US?
Where does it leave me from a tax perspective?
In this guide, we'll answer the key questions that we're often asked by British Expats in the US.
Financial Planning US | The First Steps
Prior to engaging with a financial adviser or making financial decisions, the first step is to understand your overall financial position in as much detail as physically possible. You can view this as a 'financial health check'.
Below is a list of questions you should ask yourself before making any important decisions:
Do I have a rainy day fund, or emergency fund in place in case of unemployment, or unforeseen circumstances?
How much money do I need to fund my lifestyle, whether this is in retirement or as you approach retirement age.
What are my monthly expenses, and do I have a surplus each month or are my funds depleting?
Where are my investments held, and what return are they yielding?
How are my retirement accounts looking, and are they optimised for how I want to live in the future?
Tax Planning For UK Expats
There is a dual taxation agreement in place between the UK and the US.
This means that you cannot be taxed twice on income, i.e your pension income cannot be taxed in both the UK and the United States.
For all investment accounts, gains and income derived from these sources, as a US resident these will typically be due in the US. We strongly suggest all UK Expats take local state tax advice to fully understand their position, so as not to fall foul of any reporting requirements and create issues with the IRS.
Retirement Planning For British Expats
The UK and the United States have different pension systems, and are not considered like for like by HMRC or the IRS.
This means that you cannot transfer your UK pension to a 401k account, or an IRA (individual retirement account). As such, if you do accumulate US retirement savings, you should view these as separate to your UK pension pots.
How Do My UK Pensions Work in The US?
As a non-UK resident, you are unlikely to have full flexible access to your UK pension benefits. This means that your pension provider won't be able to pay you flexible amounts of money, nor can you choose how and when you wish to take an income.
For most UK Expats in the US, we would recommend transferring to an International SIPP (US SIPP).A SIPP stands for self-invested personal pension and is one of the most common retirement pots in the UK.
The International SIPP is still a UK based, FCA regulated and HMRC approved pension scheme, however it is specifically designed for US residents.
This means that by transferring to an International SIPP, you can gain the following benefits in your overseas retirement:
Full flexible access draw-down, meaning you can take as much or as little money from your pension as and when you want
Invest in USD, and access a wide range of investments tailored to your circumstances from fund managers such as Vanguard, Blackrock and Fidelity.
Have proceeds paid to a US bank account provided it is in your name
Have all pension proceeds paid free of UK tax, with the use of a Nil Tax Code (NT Code)
There are various International SIPP providers available. For a full breakdown, see our International SIPP page.
UK To US Pension Transfer
To understand how to transfer your UK pensions as a US resident with our SEC regulated Expat Wealth Management Service, you can schedule an initial consultation using the button below.
Wealth Management For British Expats In The US
The Wealth Genesis is fully independent and regulated to provide retirement and investment advice to British Expats. All our advisers are qualified in both the US, and the UK, ensuring an in-depth knowledge of both financial systems.
