Whether it’s a sporting event, a work project, or even a house renovation, the importance of teamwork cannot be overemphasised.

Different experts will provide certain skills which, combined, help produce a successful outcome.

The same applies when it comes to your financial planning and taxation if you are a UK expat in the US.

Think about investments, accountancy, tax, and estate planning, as well as legal issues related to expat finances. With all the complexity these entail, it’s easy to see why having your own team of experts to call on is so important.

To look at this issue, we put our own team together for our latest Ask an Expert podcast.

Holly Caulder is a dual-qualified US and UK tax advisor at Buzzacott, and Aidan Grant is a UK tax and estate planning attorney at Collyer Bristow.

We discussed the financial complexities that British expats face and the essential role of a coordinated cross-border advisory team. They can help you avoid pitfalls (or “landmines” as we like to call them) and take advantage of opportunities.

We strongly recommend you listen to the podcast, especially if you are planning to move to the US in the near future or have recently done so.

Here are five of the key points that Holly and Aidan raised.

1. Ideally, you should address financial issues relating to your move before you arrive in the US

From a tax-planning perspective, Holly says that the first day of your residency in the US should ideally be the end date of your pre-planning process.

Emigrating certainly involves myriad issues, including employment, where to live, closing off or managing your UK affairs, and education plans for your children.

However, financial planning, tax, and estate planning should be equally prominent on your pre-emigration to-do list. If neglected, financial and legal issues could arise.

2. The US is different when it comes to your financial affairs

The US and the UK share a language, have similar legal structures, and enjoy a substantial cultural overlap. As a result, people tend to assume that tax regulations must be equally similar.

However, it’s fair to say that this is a false assumption. In fact, it’s one which can easily land you in financial and legal difficulty if you do not plan carefully and get expert advice.

In the UK, the introduction of the Foreign Income and Gains (FIG) regime has created a period of tax certainty for expats moving there or those returning home. However, there is no such arrangement in the US. Indeed, you are subject to the US tax regime from day one.

And that’s just at a federal level. There is also an additional layer of tax complexity in the form of state-level jurisdictions, which can differ greatly depending on where you live and work.

3. Passive Foreign Investment Companies are a common landmine to avoid

In a previous Ask an Expert podcast, we described Passive Foreign Investment Companies (PFICs) as the number one expat landmine that can be avoided with effective financial planning.

It’s often better to sort these before arriving in the US. In large part, that’s because of the onerous reporting requirements in the US on any UK-based collective investments and savings you may hold, as well as the potentially punitive tax charges.

Expert advice can be highly useful in this regard. An advisor can help you decide whether to divest or consolidate your UK-based assets, such as ISAs, SIPPs, unit trusts, and investment funds.

4. Cross-border estate planning can be complex, especially when trusts are involved

Trusts have a common name and purpose in both the UK and US.

They can be a key estate planning vehicle, helping you pass assets to your children and protect your accrued wealth from tax.

However, it is a mistake to assume that they are treated similarly in both jurisdictions, and that they can be easily transferred when you move between countries.

As Aidan explained during the podcast, trusts are treated in different ways, particularly around issues such as the residency of trustees.

These differences highlight the importance of reviewing all your trust arrangements with an expert.

5. Your team of advisers can help you make the most of opportunities

Much of what you have read about here relates to warnings about the cost of stepping on a financial landmine. We would also stress that there are potential financial upsides to being an expat in the US.

With careful planning, you can work with your team of experts to take advantage of some cross-border tax benefits.

As both Holly and Aidan were keen to stress, all experts will work collaboratively to ensure you have the best possible holistic financial plan in place.

Clearly, expert advice will cost money. But in our experience, it can pay great dividends by helping you avoid punitive costs and take advantage of new opportunities.

Get in touch

As you have probably appreciated from reading this article, expert advice is essential when it comes to your financial arrangements.

If you are a British expat living in the US, or you are looking to make the move in the near future, get in touch to arrange an exploratory Zoom call to discuss your options.

Please note

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