Account Options

The list below gives a very high level overview of the different investment options available to US citizens in the UK. I’ll write a more detailed blog post about each one and link it here as I do. The Flowchart gives a quick overview of how these can work together to help you save and invest.

• Typically Recommended Investment Accounts (in rough priority order):
  • UK Employer Pension: US & UK tax advantaged, free money from the match, relatively high limits, can get index funds
  • US Roth IRA: US & UK tax advantaged, can get index funds
  • UK Self-Invested Personal Pension: UK tax advantaged (maybe US), relatively high limit, probably can get index funds without PFIC pain
  • UK Stocks & Shares ISA: UK tax advantaged, high limit, but individual stocks only (or deal with PFIC headaches)
    • I’m documenting my experiment of opening an ISA and creating a homebrew pseudo-index fund
  • UK Lifetime ISA: UK tax advantaged, 25% bonus but locked away until 60 except for first house purchase, low limit, individual stocks (or PFIC pain)
  • US Taxable Brokerage: no limits, no tax advantages, can get index funds if they’ll sell them to you
  • UK Taxable Brokerage: no limits, no tax advantages, individual stocks (or PFIC pain)
• Social Security/Government Pensions
  • UK New State Pension: you mostly don’t have a choice and have to contribute. Relatively low typical and maximum benefits compared to US Social Security
  • US Social Security: still eligible if you’re eligible from previous working in the US. May be able to contribute from the UK. Higher typical and max benefits than UK State Pension
• Other Accounts with Specific/Niche Applications
  • UK Cash ISA: Glorified savings account with UK tax advantage
  • UK Innovative Finance ISA: P2P loans with UK tax advantage.
  • UK Junior ISA: Cash or S&S ISA for kids, same idea as the adult ones with a lower limit
  • UK and US Savings Accounts: low interest but safe, US and UK taxable
  • UK Premium Bonds: low interest with the chance of winning big, UK tax free, US taxable
  • US HSA: no UK tax advantages, careful of HMRC reporting funds
  • US Traditional IRA: big question as to whether contributions are UK tax deductible. If they aren’t, almost certainly better with a Roth IRA
• US Employer Accounts
  • 401k, 403b, TSP, SIMPLE, SEP, etc.: keep them if you have them or roll into an IRA, US and UK tax advantaged
• Typically Not Recommended
  • US 529 College Savings: No UK tax advantages and likely some tax drawbacks/penalties – typically avoid.

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