Vanguard US domiciled ETFs that are UK HMRC reporting funds
US citizens and US permanent residents (green card holders) living in the UK can hold these funds without running into problems with the US's harsh Passive foreign investment company (PFIC) tax regime, and also without running into higher UK tax because they hold HMRC non-reporting funds. The information in this article is specific to US citizens and US permanent residents who are UK residents.
US citizens and US permanent residents (green card holders) living in the UK cannot use the normal range of UCITS funds and ETFs offered to other UK and EU residents, because of the way the US's citizenship-based taxation and harsh Passive foreign investment company (PFIC) tax regime intersect. For these investors, holding US domiciled funds or ETFs is one of the few viable ways to hold collective investment vehicles.
However, the UK also has rules that discourage some "offshore" fund holdings. Gains in a non-UCITS fund or ETF that lacks HMRC reporting status are taxed to the investor at higher income rates, rather than lower and more beneficial capital gains rates.
Many US domiciled funds and ETFs will not have HMRC reporting status. However, a selection of Vanguard's US domiciled ETFs are HMRC reporting funds. A US citizen or green card holder living in the UK can therefore invest through these ETFs without running into either country's unpleasant tax regime for "offshore" funds.
Vanguard US domiciled ETFs with HMRC reporting status
The following table[note 1] summarises Vanguard US domiciled ETFs that a US citizen living in the UK can safely use in taxable accounts. These would also be safe to use in a UK Individual Savings Account (ISA), although for US citizens and green card holders the ISA wrapper only provides protection from UK taxes, not from any US taxes. The US will tax ISA gains annually as if it is a normal taxable account.
The table shows data from HMRC's approved offshore reporting funds list, as of 1 Apr 2021. This list shows funds by CUSIP. The mapping from CUSIP to fund exchange ticker uses data provided by DTCC, as of 18 Jul 2019.
Investors planning to rely on the information in this table should first check the above sources to ensure that the table data remains accurate. Also, note that this table may not be an exhaustive list of all US domiciled ETFs that are HMRC reporting funds.
|Fund name||ETF ticker||Fund CUSIP||HMRC reporting since|
|Vanguard S&P Small-Cap 600 Growth Index Fund - ETF Shares||VIOG||921932794||1 Sep 2010|
|Vanguard S&P Small-Cap 600 Value Index Fund - ETF Shares||VIOV||921932778||1 Sep 2010|
|Vanguard S&P Small-Cap 600 Index Fund - ETF Shares||VIOO||921932828||1 Sep 2010|
|Vanguard S&P Mid-Cap 400 Growth Index Fund - ETF Shares||IVOG||921932869||1 Sep 2010|
|Vanguard S&P Mid-Cap 400 Value Index Fund - ETF Shares||IVOV||921932844||1 Sep 2010|
|Vanguard S&P Mid-Cap 400 Index Fund - ETF Shares||IVOO||921932885||1 Sep 2010|
|Vanguard S&P 500 Growth Index Fund - ETF Shares||VOOG||921932505||1 Sep 2010|
|Vanguard S&P 500 Value Index Fund - ETF Shares||VOOV||921932703||1 Sep 2010|
|Vanguard Long-Term Bond Index Fund - ETF Shares||BLV||921937793||1 Jan 2011|
|Vanguard Intermediate-Term Bond Index Fund - ETF Shares||BIV||921937819||1 Jan 2011|
|Vanguard Short-Term Bond Index Fund - ETF Shares||BSV||921937827||1 Jan 2011|
|Vanguard Total Bond Market Index Fund - ETF Shares||BND||921937835||1 Jan 2011|
|Vanguard Total International Bond ETF Index Fund||BNDX||92203J407||1 Nov 2013|
|Vanguard 500 Index Fund - ETF Shares||VOO||922908363||1 Jan 2011|
|Vanguard Small-Cap Growth Index Fund - ETF Shares||VBK||922908595||1 Jan 2011|
|Vanguard Mid-Cap Growth Index Fund - ETF Shares||VOT||922908538||1 Jan 2011|
|Vanguard Growth Index Fund - ETF Shares||VUG||922908736||1 Jan 2011|
|Vanguard Small-Cap Value Index Fund - ETF Shares||VBR||922908611||1 Jan 2011|
|Vanguard Mid-Cap Value Index Fund - ETF Shares||VOE||922908512||1 Jan 2011|
|Vanguard Value Index Fund - ETF Shares||VTV||922908744||1 Jan 2011|
|Vanguard Small-Cap Index Fund - ETF Shares||VB||922908751||1 Jan 2011|
|Vanguard Mid-Cap Index Fund Vanguard Mid-Cap ETF||VO||922908629||1 Jan 2011|
|Vanguard Large-Cap Index Fund - ETF Shares||VV||922908637||1 Jan 2011|
|Vanguard Extended Market Index Fund - ETF Shares||VXF||922908652||1 Jan 2011|
|Vanguard Total Stock Market Index Fund - ETF Shares||VTI||922908769||1 Jan 2011|
|Vanguard Global ex-U.S. Real Estate Index Fund - ETF Shares||VNQI||922042676||1 Nov 2010|
|Vanguard FTSE All-World ex-US Small-Cap Index Fund - ETF Shares||VSS||922042718||1 Nov 2010|
|Vanguard Total World Stock Index Fund - ETF Shares||VT||922042742||1 Nov 2010|
|Vanguard FTSE All-World ex-US Index Fund - ETF Shares||VEU||922042775||1 Nov 2010|
|Vanguard Emerging Markets Stock Index Fund - ETF Shares||VWO||922042858||1 Nov 2010|
|Vanguard FTSE Pacific Fund - ETF Shares||VPL||922042866||1 Nov 2010|
|Vanguard FTSE Europe Fund - ETF Shares||VGK||922042874||1 Nov 2010|
|Vanguard Mortgage-Backed Securities Index Fund - ETF Shares||VMBS||92206C771||1 Sep 2010|
|Vanguard Long-Term Corporate Bond Index Fund - ETF Shares||VCLT||92206C813||1 Sep 2010|
|Vanguard Intermediate-Term Corporate Bond Index Fund - ETF Shares||VCIT||92206C870||1 Sep 2010|
|Vanguard Short-Term Corporate Bond Index Fund - ETF Shares||VCSH||92206C409||1 Sep 2010|
|Vanguard Long-Term Treasury Index Fund - ETF Shares||VGLT||92206C847||1 Sep 2010|
|Vanguard Intermediate-Term Treasury Index Fund - ETF Shares||VGIT||92206C706||1 Sep 2010|
|Vanguard Short-Term Treasury Index Fund - ETF Shares||VGSH||92206C102||1 Sep 2010|
|Vanguard Russell 3000 Index Fund - ETF Shares||VTHR||92206C599||1 Sep 2010|
|Vanguard Russell 2000 Growth Index Fund - ETF Shares||VTWG||92206C623||1 Sep 2010|
|Vanguard Russell 2000 Value Index Fund -ETF Shares||VTWV||92206C649||1 Sep 2010|
|Vanguard Russell 2000 Index Fund - ETF Shares||VTWO||92206C664||1 Sep 2010|
|Vanguard Russell 1000 Growth Index Fund - ETF Shares||VONG||92206C680||1 Sep 2010|
|Vanguard Russell 1000 Value Index Fund - ETF Shares||VONV||92206C714||1 Sep 2010|
|Vanguard Russell 1000 Index Fund - ETF Shares||VONE||92206C730||1 Sep 2010|
|Vanguard REIT Index Fund - ETF Shares||VNQ||922908553||1 Feb 2011|
|Vanguard Dividend Appreciation Index Fund - ETF Shares||VIG||921908844||1 Feb 2011|
|Vanguard Total International Stock Index Fund - ETF Shares||VXUS||921909768||1 Nov 2010|
|Vanguard Tax-Managed International Fund Vanguard FTSE Developed Markets ETF||VEA||921943858||1 Jan 2011|
|Vanguard High Dividend Yield Index Fund - ETF Shares||VYM||921946406||1 Nov 2010|
|Vanguard Emerging Markets Government Bond ETF Index Fund||VWOB||921946885||1 Nov 2013|
|Vanguard Mega Cap Growth Index Fund - ETF Shares||MGK||921910816||1 Sep 2010|
|Vanguard Mega Cap Value Index Fund - ETF Shares||MGV||921910840||1 Sep 2010|
|Vanguard Mega Cap Index Fund - ETF Shares||MGC||921910873||1 Sep 2010|
|Vanguard Utilities Index Fund - ETF Shares||VPU||92204A876||1 Sep 2010|
|Vanguard Telecommunication Services Index Fund - ETF Shares||VOX||92204A884||1 Sep 2010|
|Vanguard Materials Index Fund - ETF Shares||VAW||92204A801||1 Sep 2010|
|Vanguard Information Technology Index Fund - ETF Shares||VGT||92204A702||1 Sep 2010|
|Vanguard Industrials Index Fund - ETF Shares||VIS||92204A603||1 Sep 2010|
|Vanguard Health Care Index Fund - ETF Shares||VHT||92204A504||1 Sep 2010|
|Vanguard Financials Index Fund - ETF Shares||VFH||92204A405||1 Sep 2010|
|Vanguard Energy Index Fund - ETF Shares||VDE||92204A306||1 Sep 2010|
|Vanguard Consumer Staples Index Fund - ETF Shares||VDC||92204A207||1 Sep 2010|
|Vanguard Consumer Discretionary Index Fund - ETF Shares||VCR||92204A108||1 Sep 2010|
|Vanguard Extended Duration Treasury Index Fund - ETF Shares||EDV||921910709||1 Sep 2010|
Problems caused by FATCA and PRIIPs
After FATCA in 2010, many UK financial institutions and brokerages started refusing accounts for US citizens and US green card holders, even those living in the UK. At the same time, some US brokerages began shutting off access for US citizens and green card holders living outside the US.
In 2018, the European PRIIPs (Packaged Retail and Insurance-based Investment Products) regulation became effective. One result is that it is now difficult or even impossible for residents of the EU community to purchase US domiciled funds directly (although indirect purchases potentially remain possible[note 2]). Shares purchased before the regulation came into effect can be kept and sold, but EU residents can generally no longer buy new shares of these funds or ETFs. The UK left the EU in January 2020, but created its own 'UK PRIIPs' regime that is fully aligned with the EU PRIIPs, so PRIIPs restrictions continue to apply in the UK.
US citizens and green card holders living in the UK can however use US brokerage accounts, if they have one available to them, to access US domiciled ETFs. Unfortunately however, the combination of these restrictions has made life tricky for US taxable person investors living in the UK, since it has severely limited the options for holding Vanguard US domiciled ETFs with HMRC reporting fund status.
Effects of ETFs gaining or losing HMRC reporting status
Investors should pay close attention to the "HMRC reporting since" column in the table above. HMRC has different tax rules where an ETF or other "offshore" fund is held by an investor outside of any period in which it is an HMRC reporting fund.
PFICs in UK pensions
Under regulations issued by the IRS in 2016, there is an exemption to PFIC reporting for any funds held in UK pensions. Here, the US/UK tax treaty protects US taxable person investors from PFIC rules, so that they can hold any funds that they like in a UK pension, without being affected by these rules.
Non-reporting funds in US pensions
Symmetrically with the above, the UK's HMRC reporting funds regime only applies to funds held outside of UK tax-sheltered accounts. Holding non-reporting funds in a US pension, including Roth accounts, causes no tax problems. (Also, no problems in a UK pension or ISA, to the extent that PRIIPs does not prevent their being traded at all inside UK based accounts.)
- This table is built using Google Sheets to extract data from HMRC's reporting funds spreadsheet. You can find the details for this in the discussion page associated with this page.
- Forum member "finrod_2002" provides details of how an investor might use options trades to work around PRIIPs restrictions, in Bogleheads® forum post: . February 17, 2019. Viewed October 28, 2019.
- Taxation as a US person living abroad
- Passive foreign investment company
- UK Individual Savings Accounts
- UK personal pensions
- "Offshore funds: distributing and reporting funds". HMRC. Retrieved October 17, 2019.
- "Why expat Americans are giving up their passports". BBC. Retrieved July 18, 2019.
- "Why US Brokerage Accounts of American Expats are Being Closed (2017)". Thun Financial. Retrieved July 18, 2019.
- "Packaged Retail and Insurance-based Investment Products (Amendment) (EU Exit)". GOV.UK. Retrieved February 1, 2020. Regulations 2019: explanatory information
- "Offshore Funds Manual, Investors in non-reporting funds". HMRC. Retrieved August 13, 2019. Conversion of a non-reporting fund to a reporting fund: consequences for participants in non-reporting fund - Regulation 48.
- "Offshore Funds Manual, Reporting funds". HMRC. Retrieved August 13, 2019. Tax treatment of participants in reporting funds: deemed disposal election - Regulation 100.
- "United States – IRS Issues Final PFIC Regulations". KPMG Global. Retrieved February 1, 2020.
- Undertakings for Collective Investment in Transferable Securities (UCITS)
- Offshore funds: distributing and reporting funds, from the UK Government
- Approved offshore reporting funds, from the UK Government
- Exchange-traded funds (ETF) chart, from DTCC.
- Packaged Retail and Insurance-based Investment Products (PRIIPs)
- Foreign Account Tax Compliance Act (FATCA)