Moving back from USA to my original UK location

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scouser123
Posts: 4
Joined: Sun Nov 20, 2022 10:46 am

Moving back from USA to my original UK location

Post by scouser123 »

I'm originally from England but moved to the USA 25 years ago to hopefully pursue better career options. I'm now a retired Dual UK-US Citizen and am moving back to my original UK location after all this time to be nearer my still UK based family (nieces and nephews).

All my retirement funds are currently held in a single US based Fidelity Account in a Rollover IRA and a Roth IRA in the following 5 Vanguard ETFs. The varying proportions shown for each ETF were advised by people I found in this and other finance websites, and have done well for me over the years:

40% BND US Bonds
10% BNDX Non-US Bonds
35% VTI US Stocks
10% VXUS Non-US Stocks
5% VNQ REITS

My issue is these 5 ETFs don't seem available in the UK. Also, the UK based ETFs I have found seem to be smaller amounts combined with other ETFs and Mutual Funds I'm not familiar with all held in larger single "Retirement Funds" you purchase.
I don't want to go back to individual stocks like I started with 25 years ago that seemed to lose out over the years, before I was rightly advised to switch all my investments to individual ETFs covering the global world, like my US current 5 ETFs do.

A US friend advised me rather than cash in my current total US ETF portfolio into dollars and convert them all into pounds in the UK and re-invest them there at one time, is to only move the equivalent of 20,000 pounds each year and move them into a UK based ISA when I'm back living there for good. I can repeat this each year in 20,000-pound additions to the ISA I opened, with the remaining money still in my 5 US based ETFs still held in my US based Fidelity account hopefully still collecting dividends while I'm living in the UK for good.

Does this make sense, assuming I can find some individual UK based ETFs to replace the US ones I'm cashing in on each year 20,000 pounds equivalent at a time?
TedSwippet
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Joined: Mon Jun 04, 2007 4:19 pm
Location: UK

Re: Moving back from USA to my original UK location

Post by TedSwippet »

Welcome.
scouser123 wrote: Sun Nov 20, 2022 8:40 pm I'm originally from England but moved to the USA 25 years ago to hopefully pursue better career options. I'm now a retired Dual UK-US Citizen and am moving back to my original UK location after all this time to be nearer my still UK based family (nieces and nephews).
Unfortunately for you, the part underlined above is likely to cause you considerable investment pain. Some relevant wiki articles to get you started:

- US tax pitfalls for a US person living abroad - Bogleheads
- Taxation as a US person living abroad - Bogleheads
- Passive foreign investment company - Bogleheads
scouser123 wrote: Sun Nov 20, 2022 8:40 pm All my retirement funds are currently held in a single US based Fidelity Account in a Rollover IRA and a Roth IRA in the following 5 Vanguard ETFs. The varying proportions shown for each ETF were advised by people I found in this and other finance websites, and have done well for me over the years:

40% BND US Bonds
10% BNDX Non-US Bonds
35% VTI US Stocks
10% VXUS Non-US Stocks
5% VNQ REITS
The US/UK tax treaty fully protects IRAs, both Roth (tax free in the US and the UK), and traditional (taxable only when withdrawn). And while the UK has a (much, much less brutal) analogue to the US's appalling PFIC tax rule, it would only apply to things held outside the IRAs, and if you do have other non-IRA US investments, the ETFs that you list above are, fortunately, not caught by it. See:

- Vanguard US domiciled ETFs that are UK HMRC reporting funds - Bogleheads

In that respect at least, there should be no overwhelming tax problems from retaining your existing investments as a UK resident. Which is handy, because ...
scouser123 wrote: Sun Nov 20, 2022 8:40 pm My issue is these 5 ETFs don't seem available in the UK. Also, the UK based ETFs I have found seem to be smaller amounts combined with other ETFs and Mutual Funds I'm not familiar with all held in larger single "Retirement Funds" you purchase.
I don't want to go back to individual stocks like I started with 25 years ago that seemed to lose out over the years, before I was rightly advised to switch all my investments to individual ETFs covering the global world, like my US current 5 ETFs do.

A US friend advised me rather than cash in my current total US ETF portfolio into dollars and convert them all into pounds in the UK and re-invest them there at one time, is to only move the equivalent of 20,000 pounds each year and move them into a UK based ISA when I'm back living there for good. I can repeat this each year in 20,000-pound additions to the ISA I opened, with the remaining money still in my 5 US based ETFs still held in my US based Fidelity account hopefully still collecting dividends while I'm living in the UK for good.
Not a terribly useful idea. The US does not recognise ISAs as tax-sheltered, and under PRIIPs regulations, no UK ISA or unwrapped trading account will offer the US domiciled ETFs that you will need if you are to avoid the US's dreadful PFIC tax rule. You could hold individual shares in an ISA; no UK tax hassles, but still US tax ones as (again) an ISA is not a US tax shelter.

And that's if you can even find a UK platform that will open an ISA for you. Because of FATCA, many UK brokerages now routinely reject US citizens as clients. Even Vanguard UK. Anecdotally, Hargreaves Lansdown might be willing to offer you some types of account, and probably also Interactive Brokers (but not Interactive Investor; similar name, entirely different company), but overall you will find that your choice of usable UK investment platforms is severely limited. Meanwhile, Fidelity US may well restrict your trading with them once they know you are no longer a US resident. Typically, hold and sell are okay, but no new fund purchases of any type, which would preclude rebalancing.

The only thing going for this idea is that it is less bad that your thoughts about converting everything you currently have to GBP and then reinvesting in equivalent UK funds (which would, of course, be US PFICs).

All probably pretty depressing news, I imagine. Likely not at all what you wanted to read. Sorry about that. You can of course complain to your congresscritter, but only for catharsis rather than for any actual action.

Finally, I'd recommend a forum search to find previous posts around this same topic. Forum member tubaleiter's posts in particular -- US citizen currently living in the UK.
Last edited by TedSwippet on Mon Nov 21, 2022 12:25 pm, edited 1 time in total.
tubaleiter
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Joined: Tue Mar 09, 2021 12:58 pm

Re: Moving back from USA to my original UK location

Post by tubaleiter »

Thanks for the mention tedswippet - you've covered all the bases, as usual, not much I can add! But will try to recap from my perspective.

scouser123, to sum up your situation (because the details can really matter!): all of your investments today are in either a Traditional (rollover) or Roth IRA, right? Nothing outside? If so, you're actually in a really good place for moving to the UK. Taxable investments add complexity, stuff like 529, HSA, etc. do too. But IRAs are simple.

Assuming that's true, you can move to the UK without worry. As you need money, withdraw from your IRAs. Traditional withdrawals will be UK and US taxable income (and in practice, your UK taxes will be higher than US ones - use the Foreign Tax Credit and you likely owe no US tax). Roth withdrawals will be tax-free in both countries. Traditional to Roth conversions have some complexity and treaty grey areas, I can expand on that if conversions interest you, but you can also live quite happily without them.

ISAs do you no good - you would be moving money from an IRA that a) is recognized by both countries and b) shield you from the PFIC mess, as well as HMRC reporting funds concerns. An ISA is a) only UK tax-advantaged, so you'd pay real US tax on dividends and capital gains and b) no help with the PFIC/PRIIPS mess, you're practically stuck with individual stocks. That's not saying ISAs are bad, but they're clearly not as good as an IRA.

The one challenge you may have is how Fidelity treats you when they realize that you are no longer living in the US (assuming you choose to tell them). Reports are all over the map, some brokers don't seem to care at all, some will close your account, and lots in between (freeze further investments but stay open, stuff like that). Doesn't seem to be consistent even at the same broker, so you won't really know until you try. Worth having a backup plan - Interactive Brokers is a solid suggestion there, they have zero issue with me having an IRA with a UK address (but they won't let me buy US ETFs, so you'd want to transfer the holdings, not cash). But try Fidelity and see what they say.

All that said, you're actually in a much better situation than if you were moving to the UK and intending to continue earning - that gets significantly more complicated! You can just stick with your IRAs and enjoy your retirement using them, with minimal hassle.

Happy to answer questions or expand on any of the above :)
Valuethinker
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Re: Moving back from USA to my original UK location

Post by Valuethinker »

scouser123 wrote: Sun Nov 20, 2022 8:40 pm I'm originally from England but moved to the USA 25 years ago to hopefully pursue better career options. I'm now a retired Dual UK-US Citizen and am moving back to my original UK location after all this time to be nearer my still UK based family (nieces and nephews).

All my retirement funds are currently held in a single US based Fidelity Account in a Rollover IRA and a Roth IRA in the following 5 Vanguard ETFs. The varying proportions shown for each ETF were advised by people I found in this and other finance websites, and have done well for me over the years:

40% BND US Bonds
10% BNDX Non-US Bonds
35% VTI US Stocks
10% VXUS Non-US Stocks
5% VNQ REITS

My issue is these 5 ETFs don't seem available in the UK. Also, the UK based ETFs I have found seem to be smaller amounts combined with other ETFs and Mutual Funds I'm not familiar with all held in larger single "Retirement Funds" you purchase.
I don't want to go back to individual stocks like I started with 25 years ago that seemed to lose out over the years, before I was rightly advised to switch all my investments to individual ETFs covering the global world, like my US current 5 ETFs do.

A US friend advised me rather than cash in my current total US ETF portfolio into dollars and convert them all into pounds in the UK and re-invest them there at one time, is to only move the equivalent of 20,000 pounds each year and move them into a UK based ISA when I'm back living there for good. I can repeat this each year in 20,000-pound additions to the ISA I opened, with the remaining money still in my 5 US based ETFs still held in my US based Fidelity account hopefully still collecting dividends while I'm living in the UK for good.

Does this make sense, assuming I can find some individual UK based ETFs to replace the US ones I'm cashing in on each year 20,000 pounds equivalent at a time?
As per Ted Swippet you may wish to consider giving up your US citizenship. I understand this process was suspended during Covid but may have resumed.

Otherwise you need to make sure the US-domiciled ETFs you hold are "reporting" from an HMRC point of view (they do publish a list of what funds & ETFs are such) and that you don't close any US brokerage accounts. For safety, I would have at least 2 - in case one is randomly closed on you. (Basically any fund or ETF you can buy in Europe will most likely be Irish or Luxembourg domiciled, and will not be US domiciled).

Funds in retirement accounts may be exempt - I don't know whether US-UK Tax Treaties apply on these.
ShadowCat
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Re: Moving back from USA to my original UK location

Post by ShadowCat »

Wait, I thought the UK was explicitly a "supported country" for Fidelity Investments (the US based entity) and that Fidelity would not only allow you to keep your account open but also to even use bill pay, cash management, trade, etc. Is that not true anymore? Has something changed?

I know Fidelity won't open a new account for a UK resident and that countries other than the UK have significant restrictions, but I am a bit surprised that there is a change now (judging from the comments above) that Fidelity no longer supports accounts for UK residents when their accounts were opened when they were in the US. That's definitely a change and an unfortunate one if true since the UK used to have a special status for Fidelity.
TedSwippet
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Location: UK

Re: Moving back from USA to my original UK location

Post by TedSwippet »

ShadowCat wrote: Mon Nov 21, 2022 11:43 am Wait, I thought the UK was explicitly a "supported country" for Fidelity Investments (the US based entity) and that Fidelity would not only allow you to keep your account open but also to even use bill pay, cash management, trade, etc. Is that not true anymore? Has something changed?
...
To be clear, I don''t know what Fidelity will or won't do to someone who moves to the UK. I'm only going by anecdotal reports I've read here and elsewhere, and from US expats globally. No direct experience. I'm not a US citizen, nor a Fidelity US customer.

The only way to know for sure is to ask Fidelity, and any other brokers with whom you hold accounts. And recognise that the answer you get may or may not be accurate (broker frontline staff rarely have good knowledge of expat issues). And even if it is accurate, that things may well change by the time you need to rely on it.
tubaleiter
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Re: Moving back from USA to my original UK location

Post by tubaleiter »

TedSwippet wrote: Mon Nov 21, 2022 12:30 pm
ShadowCat wrote: Mon Nov 21, 2022 11:43 am Wait, I thought the UK was explicitly a "supported country" for Fidelity Investments (the US based entity) and that Fidelity would not only allow you to keep your account open but also to even use bill pay, cash management, trade, etc. Is that not true anymore? Has something changed?
...
To be clear, I don''t know what Fidelity will or won't do to someone who moves to the UK. I'm only going by anecdotal reports I've read here and elsewhere, and from US expats globally. No direct experience. I'm not a US citizen, nor a Fidelity US customer.

The only way to know for sure is to ask Fidelity, and any other brokers with whom you hold accounts. And recognise that the answer you get may or may not be accurate (broker frontline staff rarely have good knowledge of expat issues). And even if it is accurate, that things may well change by the time you need to rely on it.
And even more, it seems like some brokers vary their treatment from customer to customer. Maybe depending on account types, country of residence, former state of residence, value of holdings - really hard to say, there isn't enough data.

I believe, anecdotally, that Fidelity is one of the better ones. But not something I'd hang my hat on!
Topic Author
scouser123
Posts: 4
Joined: Sun Nov 20, 2022 10:46 am

Re: Moving back from USA to my original UK location

Post by scouser123 »

Thanks all for the fast replies. It looks like I have a lot of reading to do using the links you've all provided, which I will do.

As for TedSwippet's suggestion about giving up my US Citizenship and just sticking with my original UK one, I had considered that but unfortunately my only government provided Old Age Pension I'm entitled to now when I get to that age, is the one from the USA and is based on me being a US Citizen - I've lived and worked over in the USA for 25 years and not the UK. So, the only government old age pension I'm entitled to is the one from the USA, and not the UK.

With hindsight: when I first moved over here, I was working on a temporary US company sponsored visa. I then switched to working here on a Green Card, renewed every 5 years. It was only after a few years doing that I thought getting my Dual Citizenship made sense. Had I stayed just working here on renewable Green Cards I wouldn't have had this complexity of going back permanently to the UK as a Dual UK-US Citizen. But who knew at the time :-)
Topic Author
scouser123
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Re: Moving back from USA to my original UK location

Post by scouser123 »

...also to answer tubaleiter's question: Yes, all my investments are in a USA based Fidelity Account in either a Regular IRA or a Roth IRA. I don't have any investments outside these 2 IRAs and were both opened when I first moved to the USA. When I was first in the UK, before coming over here 25 years ago, I never really thought about investing for retirement. Or had the money to save for it or other things.
TedSwippet
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Location: UK

Re: Moving back from USA to my original UK location

Post by TedSwippet »

scouser123 wrote: Mon Nov 21, 2022 2:12 pm ... but unfortunately my only government provided Old Age Pension I'm entitled to now when I get to that age, is the one from the USA and is based on me being a US Citizen - I've lived and worked over in the USA for 25 years and not the UK. So, the only government old age pension I'm entitled to is the one from the USA, and not the UK.
On this point, if you're referring above to US social security retirement benefits, these are fully payable to US nonresident aliens (that is, non-US citizens) living outside the UK. There is no requirement to be a US citizen in order to receive them.

Full details in the relevant SSA leaflet. To save you wading through it, the tl;dr is: SS retirement benefits are payable to US nonresident alien UK citizens without any residency restrictions; under the treaty, they are paid to UK residents without any US tax withholding or liability, fully taxable in the UK; and the SSA pays them in GBP into a UK bank at a forex rate that is apparently better than anything you yourself could achieve with any bank or forex dealer.
Valuethinker
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Re: Moving back from USA to my original UK location

Post by Valuethinker »

scouser123 wrote: Mon Nov 21, 2022 2:12 pm Thanks all for the fast replies. It looks like I have a lot of reading to do using the links you've all provided, which I will do.

As for TedSwippet's suggestion about giving up my US Citizenship and just sticking with my original UK one, I had considered that but unfortunately my only government provided Old Age Pension I'm entitled to now when I get to that age, is the one from the USA and is based on me being a US Citizen - I've lived and worked over in the USA for 25 years and not the UK. So, the only government old age pension I'm entitled to is the one from the USA, and not the UK.

With hindsight: when I first moved over here, I was working on a temporary US company sponsored visa. I then switched to working here on a Green Card, renewed every 5 years. It was only after a few years doing that I thought getting my Dual Citizenship made sense. Had I stayed just working here on renewable Green Cards I wouldn't have had this complexity of going back permanently to the UK as a Dual UK-US Citizen. But who knew at the time :-)
One thing I would recommend is investigating having (at least) 2 brokerage accounts in USA. You do not want one to be randomly closed & have nothing.

My broker (not US) decided they could not have execution only clients in the UK due to legal risk-- after over 20 years being on that basis. I had to move to a managed portfolio (at a cost of well over 1% pa). Because I lacked residency in my original country I could not open an account with another broker in that country.
TedSwippet
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Re: Moving back from USA to my original UK location

Post by TedSwippet »

scouser123 wrote: Mon Nov 21, 2022 2:12 pm ... Had I stayed just working here on renewable Green Cards I wouldn't have had this complexity of going back permanently to the UK as a Dual UK-US Citizen. But who knew at the time :-)
It sounds like you moved to the US pretty much the same time that I did. I left in 2008, in direct response to the US introducing its spiteful expatriation tax.

That, more than anything, motivates dropping US citizenship if you live abroad, have another citizenship, and have not yet exceeded the $2mm asset test limit, but think you might soon (an inheritance, perhaps). This asset level is relatively modest, and far from "richer than Croesus". Own a home in any major city or large town, and have a quarter century of retirement savings behind you, and you're well on your way to that even without adding anything more.

The thing to consider is that 25 years ago, cross-border tax was simpler. Since then though, we've had a panoply of complexificating US anti-expat tax laws. The expatriation tax in 2008. FBAR, actually old and mostly unenforced previously, but dusted off in 2009 to create revenue-producing penalty assessments. FATCA in 2010, providing teeth for FBAR enforcement. GILTI in 2017. Topped off with EU/UK PRIIPs in 2018. For US expats, the direction of tax law travel has been uniformly negative for decades.

All history. The big question now is, what nonsense is coming next? Reed Amendment (expatriate exclusion clause) enforcement? Ex-PATRIOT act? Something else? Will we see a seismic shift towards a saner US tax policy for expats, perhaps even residence-based rather than citizenship-based? Or another incremental ratchet towards even greater US tax-induced repression? I know which I would put my money on.
fogalog
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Re: Moving back from USA to my original UK location

Post by fogalog »

scouser123 wrote: Mon Nov 21, 2022 2:12 pm With hindsight: when I first moved over here, I was working on a temporary US company sponsored visa. I then switched to working here on a Green Card, renewed every 5 years. It was only after a few years doing that I thought getting my Dual Citizenship made sense. Had I stayed just working here on renewable Green Cards I wouldn't have had this complexity of going back permanently to the UK as a Dual UK-US Citizen. But who knew at the time :-)
I know it is no consolation but as a long-term green card holder myself who is also considering expatriation in the next few years, I don't think you are any worse off with citizenship versus green card. It looks the same to me (at least from a financial consequences perspective).

In fact I have been considering whether the opposite is the correct approach for me: I have zero desire / need to become a US citizen but ironically it might make financial sense to become a citizen before moving abroad permanently. ie I would accept filling out non-resident US tax returns forever versus paying the egregious expatriation penalty up front. It's crazy.

Good luck!
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Hyperborea
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Re: Moving back from USA to my original UK location

Post by Hyperborea »

TedSwippet wrote: Tue Nov 22, 2022 7:01 am have not yet exceeded the $2mm asset test limit

Another thing to note is that the asset limit is not inflation adjusted so it will become progressively more restrictive. If it were it would already be nearly $2.9 million.

There are ways to shimmy under the limit with a spouse by splitting assets in a simple way (gifting and estate tax exemptions if not US citizens) to move the limit to $4 million or to ~$16 million in a complex dance (gifting, estate tax exemptions, sequential exit, good tax laws in new country on gifts). You'll need a good paper trail in case any of it is questioned by the IRS. Any of this can and might be closed by future more restrictive exit tax laws.
It’s not just that facts don’t seem to matter anymore. It’s that it doesn’t seem to matter that facts don’t matter.
seajay
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Re: Moving back from USA to my original UK location

Post by seajay »

scouser123 wrote: Sun Nov 20, 2022 8:40 pm I'm originally from England but moved to the USA 25 years ago to hopefully pursue better career options. I'm now a retired Dual UK-US Citizen and am moving back to my original UK location after all this time to be nearer my still UK based family (nieces and nephews).
I'd suggest giving UK residence a trial run first, a lot has changed over the last 25 years. Rent and live the life for a month or two just to ensure you'd feel OK with the actual long term move.
Valuethinker
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Re: Moving back from USA to my original UK location

Post by Valuethinker »

seajay wrote: Wed Nov 23, 2022 4:09 am
scouser123 wrote: Sun Nov 20, 2022 8:40 pm I'm originally from England but moved to the USA 25 years ago to hopefully pursue better career options. I'm now a retired Dual UK-US Citizen and am moving back to my original UK location after all this time to be nearer my still UK based family (nieces and nephews).
I'd suggest giving UK residence a trial run first, a lot has changed over the last 25 years. Rent and live the life for a month or two just to ensure you'd feel OK with the actual long term move.
We are in a particularly bad place now - the energy & cost-of-living crisis plus cuts in local government etc. It's not a happy place (and is likely to get less so this winter).

I think it takes a year to discover whether Old Blighty suits. I know of British emigrants to North America who have thought about coming back - but they don't imagine the diverse (and fragmented) society we have become. These are people who left in the 1950s, 60s, 70s mind -- so much greater changes. And the memory edits out the bad stuff but to return is to confront it.

So my advice to anyone returning to the homelands would be to rent for a year and see how they like it.

Also even if you grew up with the weather, it can be a shock (particularly in the more western and northern parts of these bonny isles...)
seajay
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Re: Moving back from USA to my original UK location

Post by seajay »

Valuethinker wrote: Wed Nov 23, 2022 5:21 amWe [UK] are in a particularly bad place now - the energy & cost-of-living crisis plus cuts in local government etc. It's not a happy place (and is likely to get less so this winter).
Entered a confiscatory era. Major fiat currencies don't default they just partial confiscate in a opaque manner and the UK has just entered into such times. Yearly capital gains tax exemption allowance for instance are presently GBP 20,000, but are being cut to 3,000 over the next couple of years, which being a nominal figure is also devalued in real terms (and Retail Price Index is presently running at 14%). When the state needs money it can raise it one way or another, via pushing inflation and increasing taxation for instance. Many flight countries in punitive taxation times (as all fiat currency countries endure at times), especially those with wealth preservation/retention in mind. Daft policy in many respects as it is said that the UK's top 1% pay a third of its total income tax take, and when they flight the country that leaves the rest having to pay 50% more in taxation to fill that hole. Poor execution by the short term prior PM to try and scale up that 1% (double the number and the rest see their tax liabilities drop) has resulted in a 180 degree turn-around to the complete opposite. Taking a sizeable pot of money into such a arena is at risk of that not working out well.
tubaleiter
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Re: Moving back from USA to my original UK location

Post by tubaleiter »

A lot of doom and gloom in the last few posts here, so want to present a little positivity/balance:

1. The intersection of US and UK tax laws is absolutely a pain, but it is not so bad that it's something you can't navigate through. Especially in your situation, with your wealth well-protected in tax-advantaged accounts recognized by both countries. But in mine too, as somebody still earning - I can use my UK pension and US Roth IRA to protect a sizeable amount a year without any PFIC issues, and individual stocks in an ISA or index funds in a US brokerage (using a US address). Should it be a heck of a lot simpler? Absolutely. But if I wasn't a nerd about this stuff, it'd consume maybe 10 hours a year of stupid US tax filing and associated recordkeeping. Or you can pay somebody to handle it, assuming you find the right person.

2. The recent autumn statement isn't positive for personal finance, but it's not catastrophic. For you, with your funds in IRAs, it doesn't have much effect unless you're withdrawing so much from your Traditional/Rollover IRA that you're in the recently lowered 45% bracket (above ~£125k a year). Unless you have high spending requirements, it should be trivial to avoid that. The capital gains and dividend changes have no effect on IRAs. The frozen thresholds certainly do, on Traditional withdrawals, but it's a slow bleed.

3. Energy prices are a major issue, but that's true across Europe. The UK government is providing a moderate amount of support, trying to thread the needle of people not freezing vs not destroying the gilt market and causing pension funds to fail. Is that a great place to be in? Absolutely not, but despite the succession of PMs lately, most of that blame can be placed in Moscow, not London. Similar idea with inflation.

4. Brexit continues to have long-term impacts on GDP and competitiveness. But that's another slow bleed, and less relevant to a globally-invested person (especially a retired one not relying on the UK job market for employment). I'm still waiting for some benefits to show up (repeal PRIIPS/MiFid???), but it hasn't fundamentally changed the way most people live, unless they were relying on freedom of movement or others of the EU benefits.

5. The NHS is facing severe challenges, but that's true to lesser or greater extents in all countries with similar demographic profiles. If it worries you, private health insurance, or just paying out of pocket, is hugely affordable compared to the US.

6. Fundamentally, the UK is a developed country, with a high standard of living, a well educated populace, good safety, decent social safety net, and so on. Every one of those has places that are doing better, but the UK is not at the bottom of the list by any means. I still find it a great place to live, warts and all, and I have no intention of moving back to the US. It suits me very well, and I'm looking forward to being a UK citizen in another year-ish.
Valuethinker
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Re: Moving back from USA to my original UK location

Post by Valuethinker »

tubaleiter wrote: Wed Nov 23, 2022 1:26 pm A lot of doom and gloom in the last few posts here, so want to present a little positivity/balance:

1. The intersection of US and UK tax laws is absolutely a pain, but it is not so bad that it's something you can't navigate through. Especially in your situation, with your wealth well-protected in tax-advantaged accounts recognized by both countries. But in mine too, as somebody still earning - I can use my UK pension and US Roth IRA to protect a sizeable amount a year without any PFIC issues, and individual stocks in an ISA or index funds in a US brokerage (using a US address). Should it be a heck of a lot simpler? Absolutely. But if I wasn't a nerd about this stuff, it'd consume maybe 10 hours a year of stupid US tax filing and associated recordkeeping. Or you can pay somebody to handle it, assuming you find the right person.
"Reporting funds". That's key.
2. The recent autumn statement isn't positive for personal finance, but it's not catastrophic. For you, with your funds in IRAs, it doesn't have much effect unless you're withdrawing so much from your Traditional/Rollover IRA that you're in the recently lowered 45% bracket (above ~£125k a year). Unless you have high spending requirements, it should be trivial to avoid that. The capital gains and dividend changes have no effect on IRAs. The frozen thresholds certainly do, on Traditional withdrawals, but it's a slow bleed.
Good summary.
3. Energy prices are a major issue, but that's true across Europe. The UK government is providing a moderate amount of support, trying to thread the needle of people not freezing vs not destroying the gilt market and causing pension funds to fail. Is that a great place to be in? Absolutely not, but despite the succession of PMs lately, most of that blame can be placed in Moscow, not London. Similar idea with inflation.
The cause of the crisis does not mean it is not a crisis? There is a real risk people will freeze to death this year. OK poor people. But people nonetheless. General inflation is high (10%) & incomes are not keeping up-- biggest fall in standards of living since the 2008 crisis (in fact, bigger than any previously recorded in peacetime, I believe) and wiping out all of the real income gains since 2010.

Unfortunately the gas supply crisis is likely to last into 2024. Much depends on how cold a winter we have (and weather the wind blows) across NW Europe. And the French reactors. But it's unlikely that Europe can fully replace Russian gas either this winter or the one after. Which means demand destruction - read that as a general recession.

The general level of discontent in the UK is very high. Hence paralytic Tube & Rail strikes over Christmas & New Year. Postal strikes.

This does all remind me of the late 1970s, but it is not as bad as this - yet.
4. Brexit continues to have long-term impacts on GDP and competitiveness. But that's another slow bleed, and less relevant to a globally-invested person (especially a retired one not relying on the UK job market for employment). I'm still waiting for some benefits to show up (repeal PRIIPS/MiFid???), but it hasn't fundamentally changed the way most people live, unless they were relying on freedom of movement or others of the EU benefits.
I don't think we will see repeal of PRIIPs, because of the need in financial services for regulatory alignment with other countries. However I am not an expert on these issues. AFAIK there is no political will for such a change to PRIIPs-- it does not obviously inconvenience enough investors.
5. The NHS is facing severe challenges, but that's true to lesser or greater extents in all countries with similar demographic profiles. If it worries you, private health insurance, or just paying out of pocket, is hugely affordable compared to the US.
It's not cheap for over 60s. Agree US healthcare costs are crazy.
6. Fundamentally, the UK is a developed country, with a high standard of living, a well educated populace, good safety, decent social safety net, and so on. Every one of those has places that are doing better, but the UK is not at the bottom of the list by any means. I still find it a great place to live, warts and all, and I have no intention of moving back to the US. It suits me very well, and I'm looking forward to being a UK citizen in another year-ish.
The healthcare crisis matters a lot more if you are over 60 (or you have older relations). People waiting 8 hours for an ambulance, or 12+ hours to be admitted to hospital.

I would agree with you re UK as a developed country. However the collision of a number of factors: cost of living crisis, healthcare system crisis-- is making for a particularly bitter time.
Valuethinker
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Joined: Fri May 11, 2007 11:07 am

Re: Moving back from USA to my original UK location

Post by Valuethinker »

seajay wrote: Wed Nov 23, 2022 10:15 am
Valuethinker wrote: Wed Nov 23, 2022 5:21 amWe [UK] are in a particularly bad place now - the energy & cost-of-living crisis plus cuts in local government etc. It's not a happy place (and is likely to get less so this winter).
Entered a confiscatory era. Major fiat currencies don't default they just partial confiscate in a opaque manner and the UK has just entered into such times. Yearly capital gains tax exemption allowance for instance are presently GBP 20,000, but are being cut to 3,000 over the next couple of years, which being a nominal figure is also devalued in real terms (and Retail Price Index is presently running at 14%). When the state needs money it can raise it one way or another, via pushing inflation and increasing taxation for instance. Many flight countries in punitive taxation times (as all fiat currency countries endure at times), especially those with wealth preservation/retention in mind. Daft policy in many respects as it is said that the UK's top 1% pay a third of its total income tax take, and when they flight the country that leaves the rest having to pay 50% more in taxation to fill that hole. Poor execution by the short term prior PM to try and scale up that 1% (double the number and the rest see their tax liabilities drop) has resulted in a 180 degree turn-around to the complete opposite. Taking a sizeable pot of money into such a arena is at risk of that not working out well.
I am going to not reply to some things there because it would take us way outside of Forum rules. I don't agree w a number of your assertions.

The real "ex pat shock" I used to see in my father's experiences when he was back home visiting, having left England in the 1950s. The society has changed in a lot of ways. A lot of our recent politics has been about trying to recapture a nostalgically remembered early post War period, and that is gone forever (plus memory edited out a lot of the bad bits - like the fact that no one (literally) heated more than 1 room in their house).

Now 25 years only takes OP back to the mid 1990s. But even in that time many changes in the society are quite noticeable. For example more traffic. A lot more traffic. The cost of housing, especially in London and the Southeast.

So my caution is about that. It is a problem for all expats, and I certainly experience that "sense of displacement".

The home you left is not only a place, but a time in a place. And that time is gone. Most places change. And our memories edit what we remember. One cannot have the past back.

That's a good reason to spend a year here, renting. To experience the full cycle of life in this country - the full season of weather, the various contents and discontents.

Also location plays a big role. If you have money, the Southwest is a beautiful place to live (so is the North & Scotland, but in a different way).
But housing costs in the Southwest are very high, particularly relative to incomes.
WestCoastPhan
Posts: 158
Joined: Sun Apr 24, 2022 10:30 pm

Re: Moving back from USA to my original UK location

Post by WestCoastPhan »

I'm guessing the OP is moving back to Merseyside, so housing should be reasonable. To the OP - I have no tax advice, but good luck on your move! And as a dual citizen, who are you supporting in tomorrow's World Cup match?
tubaleiter
Posts: 114
Joined: Tue Mar 09, 2021 12:58 pm

Re: Moving back from USA to my original UK location

Post by tubaleiter »

Valuethinker wrote: Thu Nov 24, 2022 4:19 am 3. Energy prices are a major issue, but that's true across Europe. The UK government is providing a moderate amount of support, trying to thread the needle of people not freezing vs not destroying the gilt market and causing pension funds to fail. Is that a great place to be in? Absolutely not, but despite the succession of PMs lately, most of that blame can be placed in Moscow, not London. Similar idea with inflation.
The cause of the crisis does not mean it is not a crisis? There is a real risk people will freeze to death this year. OK poor people. But people nonetheless. General inflation is high (10%) & incomes are not keeping up-- biggest fall in standards of living since the 2008 crisis (in fact, bigger than any previously recorded in peacetime, I believe) and wiping out all of the real income gains since 2010.

Unfortunately the gas supply crisis is likely to last into 2024. Much depends on how cold a winter we have (and weather the wind blows) across NW Europe. And the French reactors. But it's unlikely that Europe can fully replace Russian gas either this winter or the one after. Which means demand destruction - read that as a general recession.

The general level of discontent in the UK is very high. Hence paralytic Tube & Rail strikes over Christmas & New Year. Postal strikes.

This does all remind me of the late 1970s, but it is not as bad as this - yet.
[/quote]

I don't disagree with you in general - there is absolutely real pain going on. But I think it's important to have some perspective. It's hard to find any country that doesn't have pain, whether long-term or as part of the ongoing energy/inflation/cost of living crisis. The exact symptoms vary, for sure - in the UK, the NHS is on its knees, while in the US healthcare is unaffordable for many, but easy to access. I have Swiss colleagues complaining about the cost of their mandatory health insurance (and energy bills). I don't think any country is perfect.

I just want to emphasize that the UK is not unique in having challenges and struggling people. The exact constellation of the pain is unique, but everywhere has challenges. Equally, some people are thriving in every country. I don't see the UK as an outlier in either way, neither particularly miserable, nor particularly utopian. It fits my personality and preferences, and I'm happy to be here, but I worry about my energy bills and mortgage rates too.
Topic Author
scouser123
Posts: 4
Joined: Sun Nov 20, 2022 10:46 am

Re: Moving back from USA to my original UK location

Post by scouser123 »

WestCoastPhan wrote: Thu Nov 24, 2022 11:51 am I'm guessing the OP is moving back to Merseyside, so housing should be reasonable. To the OP - I have no tax advice, but good luck on your move! And as a dual citizen, who are you supporting in tomorrow's World Cup match?
Sorry I only now read your post. England of course...otherwise my brothers in Liverpool would never speak to me again.
It was a good match though.
TedSwippet
Posts: 4453
Joined: Mon Jun 04, 2007 4:19 pm
Location: UK

Re: Moving back from USA to my original UK location

Post by TedSwippet »

FYI, this thread turned out to be the trigger for development of a new wiki article. See also:

New wiki page, for US persons in the UK - Bogleheads.org
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