Principles of Investing for American Citizens Living in the UK: Principle 4 – Establish the right professional network (tax, wealth, legal, mortgage, etc)

Written by Kyle McClellan & Ollie Cutting

“Growth is never by mere chance; it is the result of forces working together” ~ James C Penney, American Businessman and Entrepreneur, Founder of the JCPenney Stores.

Moving to the UK and adjusting to how life works across the pond can be a daunting task for families that are busy with work commitments, helping their kids adjust to new schools, or perhaps finding the perfect pub for a Sunday Roast. Dealing with financial issues, paperwork and planning with forethought can naturally fall by the wayside, which is why it’s important to build a strong team of trusted advisors who can help to lighten the burden. The right team of professionals can provide the foundations for dealing with unexpected events, whether positive or negative and building the right team from the outset provides the comfort that there is always someone on hand to help.

We have covered at length the complexities faced by Americans when it comes to financial planning, investing, and ensuring that tax exposures have been considered. The UK and the US have enjoyed a ‘special relationship’ for generations that has fostered a healthy tradition of transatlantic migration in both directions. As the relationship has grown and developed, so too have specialist advisory practices like MASECO Private Wealth, who enjoy ‘simplifying the complex’ when it comes to being American and living in the UK or vice versa. Finding the right Wealth Manager is a strong starting point, however, it is also important to tap into a wider network of professionals in the US-UK space as and when required. Often, experienced advisors for UK clients might be restricted or less qualified in their ability to advise on the US considerations, and it is preferable to work with professionals with a proven track record of helping Americans in the UK. The following are some of the most common situations requiring great teamwork:

1.)    Tax Compliance:

a.    Americans in the UK must consider tax implications from a UK (HMRC) and US (IRS) perspective but also work with someone who understands the interplay between the two tax systems, by interpreting the US-UK tax treaty and ensuring proper usage of foreign tax credits. This creates a third field in tax for specialist US-UK advisors, and a good Wealth Manager can help to introduce you to an appropriate advisory firm.

b.    You may benefit from paying taxes in the UK within the calendar year to allow you to file in the US and not overpay taxes, having to reclaim them at a later date. This highlights the potential benefit of working with one firm on both tax returns.

c.    Interests in Trusts and company shareholdings can often require deeply specialist advice from the right professionals for dual taxpayers. Your Wealth Manager should be able to flag areas that require closer attention from a tax or legal professional.

2.)    Estate Planning:

a.    Families with a transatlantic financial footprint may have to consider inheritance tax and probate in both the US and UK. To avoid any contentious disputes during probate and ensure assets are distributed appropriately, drafting a Will that allows for flexibility in retirement could be sensible. Lawyers that understand both jurisdictions are rare, but your Wealth Manager should know where to find them.

b.    Trusts can be effective estate planning tools when set up correctly. As is often the case, what works in the UK for a Briton might not be appropriate for those holding a US passport. Legal and tax professionals with a clear understanding of the US and UK are invaluable when setting up wealth protection vehicles for future generations, as-is your Wealth Manager for ensuring the underlying investments are held in a diversified, tax-efficient strategy.

c.    Life insurance policies established in another jurisdiction may not always remain fit for purpose when you move. Your Wealth Manager can assess the policies from an investment and currency exposure standpoint and bring in professionals on the insurance and tax side to determine whether it might make sense to wind down existing policies or consider a restructure (for instance, migrating them into Trusts) with the help of a specialist lawyer.

3.)    Purchasing Property:

a.    If an American is buying a new home in the UK, they may need a specialist mortgage advisor or credit specialist to help them access the best rates on offer.

b.    A US-UK tax advisor might be required to comment on remitting assets to the UK for the purchase, selling down property in another jurisdiction, or to clarify the ongoing US tax implications of taking on and repaying debt in a  currency other than the US dollar.

c.    Your solicitor might need to consider the legal ownership structure, particularly between US and non-US spouses.

4.)    Banking relationships

a.    Private Banks often impose higher than standard minimum cash balances on US individuals living in the UK. Such individuals may benefit from being introduced to lending options against their invested assets, whether in the UK, US or offshore, or to banks that have a wider range of options for Americans  living in the UK.

5.)    Charitable giving

a.    Donating can be more tax-efficient for the donor in many cases if they seek the advice of a partner firm that understands how to create tax-relief from both an IRS and HMRC perspective when making donations in either jurisdiction.

b.    For wealthier families, setting up a Foundation can have a multitude of benefits, from tax-efficient investment to ensuring donations are tax-efficient on both sides of the Atlantic. Specialist firms exist to set up Foundations fit for dual US-UK taxpayers.

Americans have a natural gift for finding their counterparts when they relocate to the UK, be it through youth softball leagues, Oscars viewing parties, college alumni events, or watching late-night playoff football games on a Sunday down at Passyunk Avenue (in West London… not Philadelphia).  Advice professionals have gleaned some of this same social spirit, and so the firms that enjoy working with Americans in the UK are becoming ever more familiar with one another and will share best practices and recommend clients to work with one another. This collegiate spirit and specialist network is an important asset, and so whether you are wondering if it makes sense to fund an ISA account like your British neighbours (usually not, unfortunately), or whether an element of your financial plan requires legal or tax advice, your Wealth Manager will be happy to direct you to an appropriate professional for the job.

Please email masecocommunications@masecopw.com to receive a copy of our Principles of Investing whitepaper in advance.

The Legal Stuff

This document may not be forwarded, copied or distributed without our prior written consent. This document has been prepared by MASECO LLP for information purposes only and does not constitute investment, tax or any other type of advice and should not be construed as such. The information contained herein is subject to copyright with all rights reserved.

The views expressed herein do not necessarily reflect the views of MASECO as a whole or any part thereof.  All investments involve risk and may lose value. The value of your investment can go down depending upon market conditions and you may not get back the original amount invested. Your capital is always at risk. Information about potential tax benefits is based on our understanding of current tax law and practice and may be subject to change.  The levels and bases of, and reliefs from, taxation is subject to change. The tax treatment depends on the individual circumstances of each person and may be subject to change in the future. MASECO Private Wealth is not a tax specialist.  We recommend that anyone considering investing seeks their own tax advice.

MASECO LLP (trading as MASECO Private Wealth and MASECO Institutional) is established as a limited liability partnership under the laws of England and Wales (Companies House No. OC337650) and has its registered office at Burleigh House, 357 Strand, London WC2R 0HS.  The individual partners are Mr J E Matthews, Mr J R D Sellon, Mr A Benson, Mr D R B Dorman, Mr H Q A Findlater, Mr T Flonaes, Mr E A Howison and Ms A L Solana. Calls may be recorded for your protection and for training and monitoring purposes.

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