ISAs for US Expats

Can Americans living in the UK benefit from the tax advantages of ISAs?

As accountants that specialize in Americans living abroad, we are more than familiar with the complex area of ISA’s for US Expatriates. Feel free to contact us with any of your questions. We are always happy to help.  

Can Americans living in Britain benefit from ISAs tax advantages?

The Internal Revenue Service (IRS) identifies ISAs as Passive Foreign Investment Companies and therefore do not class ISAs as tax free in the US. This means that any money a US Expat invests into an  ISA will  be fully taxable in the US.

Fund in ISAs as a US Expat

Funds generally should not be invested into an ISA if the account holder is classed as a US citizen. This is due to the complex US reporting requirements of funds that can sometimes lead to dual taxation.

 Although the ISAs can offer US expats some tax advantages from a UK standpoint, we always recommend treating ISAs with caution as an American living abroad. It is important to consider not only the tax advantages and risks, but also the potential corresponding cost, time and stress an ISA may cause.