This flowchart is a very high level look at the options for US citizens who live in the UK and want to invest for the future (FIRE, but also normal retirement planning, etc.). For more information on each option, see the relevant entry from the Account Options page.

The flowchart assumes you’re ready for long-term investing, and your basic personal finances are already under control:
- You spend less than you earn and want to save/invest some of what is left over
- You have a sufficient emergency fund in some kind of safe place (probably a bank account, Premium Bonds, maybe some cash, etc.)
- Your debt is under control: credit cards are paid off every month, maybe a mortgage and/or low-rate car loan outstanding, no high-rate debt (payday loans, Klarna, etc.)
- You’re eligible for the NHS, so health insurance isn’t a concern. You might be paying for private insurance if you want, too.
- You’re paying UK taxes and filing US taxes, although likely not owing much if anything due to Foreign Tax Credits (from your higher UK taxes). The Foreign Earned Income Exclusion also works, but limits some of the options below and is likely to be a suboptimal result for US citizens in the UK (can’t invest in an IRA, can’t get the refundable child tax credit in the US, etc.).
- Essentially, you’re already at the “Do you have long term goals?” diamond of the UK Personal Finance Flowchart.
This website has been an amazing resource. Thank you so much for putting it together and responding to comments. I think we are in very similar situations so it’s great to read someone else’s thoughts on how to approach these issues.
One thing that has been perplexing me is this idea that if you contribute more to your U.K. pension than what your employer matches, this somehow turns it into a trust? I haven’t been able to find a good explanation of this anywhere online. Any chance you have a link where someone has written about it? Thanks so much again!
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That’s one that I don’t fully understand, either. I’ve seen some takes where a workplace pension where the employer contributes more than you, or any SIPP (since it’s all personal contributions), becomes a foreign grantor trust, and needs forms 3520 and 3520A filed. But I haven’t seen a really convincing explanation of why that is, and I’ve also seen some opinions that that is an extremely conservative interpretation and is just driving revenue to tax preparers.
The related question I also don’t know the answer to is what happens if you contribute more than the 401k limit to your pension/SIPP. There’s even less out there on that one, aside from some vague advice not to do it. The tax treaty only protects up to the limit of a corresponding plan in the other country (Article 18 Para 5b), but not clear what happens after that.
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This issue is referred to in the infamous “Revenue Procedure 2020-17”, which on the one hand appears to relieve UK pensions (including SIPPs) from form 3520 reporting, but on the other hand appears to exclude virtually every non-US pension from the relief due to its strict wording:
Click to access rp-20-17.pdf
Opinions have been posted that suggest the Rev Proc does not help:
https://www.buzzacott.co.uk/news/irs-revenue-procedure-2020-17-changes-to-foreign-pensions-for-us-taxpayers-or-not#:~:text=The%20IRS%20has%20released%20new%20rules%20regarding%20Foreign,Plans%20%28SIPPs%29%2C%20which%20many%20of%20Buzzacott%E2%80%99s%20clients%20have.
https://www.ustaxfs.com/revenue-procedure-2020-17-explained-forms-3520-3520a/
https://www.goldinglawyers.com/foreign-pension-form-3520-a-reporting/
Whereas this guy seems to think you wouldn’t need to report on 3520 until you turn the age of 55 and start taking an income:
https://www.newsmax.com/finance/stephenjdunn/irs-exempts-many-uk-sipps-from-form-3520-form-3520-a-filing-requirement/2020/03/05/id/957090/
https://www.newsmax.com/finance/stephenjdunn/sipps-isas-tax/2020/01/31/id/952232/
My personal viewpoint is that Rev Proc 2020-17 clearly intends to relieve bog-standard non-US pensions that are covered by comprehensive bilateral tax treaties, whilst not actually doing that. I’m afraid that if I attempted to file a 3520/3520a without help from a dual-certified tax lawyer that I could make things worse. I’m not trying to use a SIPP to hide a commercial property or funnel funds from an inheritance. All the money I’ve ever put into it came from employment (or transferred from actual employer sponsored pensions), apart from the years when I was self- or un-employed and so could contribute up to £3,600, but anyway that money was from savings built up through employment. Perhaps I can reconsider things when I come to draw my pension, (or hope that a new Rev Proc is someday released to clarify things), but to be honest I’ll probably just carry on as before. I report the pension annually on my FBAR and form 8938 and will have to report the income and potentially pay tax on it when I go into drawdown.
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Hi,
I am doing a training course around product management, and as part of it, we try to build a “product” to help solve a problem. I am looking into USA expat in the UK – as this is a problem that directly affects me being dual UK/USA.
Our first homework – is to reach out and interview a few people in our problems space – would love to chat to you about this problem space
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