- A US citizen cannot hold non-US mutual funds since they are treated as PFIC with onorous filing requirements.
- Using a UK Stocks and Shares ISA (tax free wrapper) maybe OK for individual stocks (but may still trigger PFIC). But no funds - an ISA cannot hold non-UK mutual funds (and since it is invisible to the IRS holding any UK funds would trigger PFIC requirements)
- I cannot contribute to a Roth IRA since I am married filing separately (wife is NRA) and earn more than $10,000.
- A UK tax payer is taxed punitively on foreign funds that are not listed with "distributor status" or I think reporting status here: http://www.hmrc.gov.uk/cisc/offshore-funds.htm
I accept that I will have to forgo any tax-advantaged accounts. I have a regular Interactive Brokers account and I guess the best thing I can do is hold US mutual funds in there. I would like to use passive Vanguard type funds, but I need to find ones that are US based, but with distributor or reporting status in the UK. I wondered if anyone here might be in a similar situation or be able to help with a list of funds that satisfy these requirements. I am sure such a list would be useful to many people who are in a similar situation and would just like to make a safe choice of fund rather than setting up more complicated financial instruments. I would start to check but it is a little daunting knowing where to start. There are thousands of funds in the HMRC list but I'm sure only a small number of them have a chance of being low cost passive funds and US based. As far as I can tell the Vanguard funds listed in the HRMC list are from the "international" arm of Vanguard (Vanguard PLc) and so are probably not US domiciled funds. Are there other companies with a range of passive funds that would be worth looking at?
I'm hoping someone with more knowledge can shed some light.