A guide to American expat investment options for US citizens living in the UK
Laurence Leigh, Investment Manager and experienced adviser in US-UK wealth management, explains why investing as an American expat can feel daunting and shares how to simplify it and get it right.
Investment Manager
12 Feb 2026
|Quick summary: How to navigate investing for UK-based Americans
Navigating investment options as a US citizen in the UK is both complex and stressful. Dual tax obligations, strict reporting rules and limited product choices often leave people thinking ‘where do I even start?’
This guide highlights the key mistakes to avoid, introduces practical, compliant options and explains why specialist advice makes the difference.
• Paying tax as a US expat in the UK
US taxes are based on citizenship, so you must file a US return even if you live in the UK. At the same time, UK tax rules can apply too, creating overlapping obligations where mistakes can be costly.
• What are the mistakes to avoid as a US expat investor in the UK?
Common mistakes include assuming UK tax wrappers like Individual Savings Accounts (ISAs) are tax-free in the US, thinking US-based assets automatically meet UK reporting rules, overlooking currency risk and trying to manage investments without guidance.
• What are the investment options for American expats in the UK?
US expats can invest in direct stocks and bonds, US-domiciled funds and ETFs with UK reporting status, UK pensions like SIPPs (which may allow tax deferral under the US-UK treaty) and General Investment Accounts - though careful planning is needed to avoid harsh penalties and ensure compliance.
• Why do UK-based US citizens need specialist advice?
US expats face complex US and UK tax rules and the right advice ensures compliance while maximising investment potential.
Paying taxes as an American expat in the UK
Unlike most countries, US taxes are based on citizenship. Even if you’ve settled in the UK, you still have to file a US tax return.
Simultaneously, you’re also likely subject to UK tax rules as a resident.
These overlapping tax systems create a unique challenge and mistakes can be costly. Let’s look at the some of the mistakes we see most often in more detail.
Common mistakes to avoid
It’s easy to assume what works for UK investors will work for you, but that’s rarely the case.
Here are some of the most common traps:
Assuming UK tax-free wrappers like ISAs are also tax-free in the US
ISAs are not tax-advantaged under US law. Income and gains inside an ISA must still be reported to the IRS (the US government agency that collects taxes), which can lead to unexpected tax bills.
Similarly, many non-US domiciled funds such as exchange-traded funds (ETFs) - a fund that tracks a group of assets and trades on the stock market like an individual stock - are also classified as Passive Foreign Investment Companies (PFICs) which attract punitive US tax treatment.
Believing that keeping assets in the US guarantees UK compliance
The UK taxes global income and gains, so investments need to work under both US and UK rules, unless you qualify for the Foreign Income and Gains Regime, which can exempt certain overseas income and gains for expats who’ve recently moved to the UK.
Overlooking currency risk
Holding only US dollar assets can expose you to exchange rate swings that affect your wealth in sterling.
Trying to manage your own investments
Rules on the investments you can buy are restrictive and often confusing. US expats can usually access only US-listed funds, direct stocks and bonds, but UK regulatory requirements can limit the availability. Without guidance from a specialist investment manager, it’s easy to end up with not enough options or compliance issues.
What are your investment options while living in the UK?
As a US expat, you shouldn’t be put off from investing as a UK resident. Despite the frustrating challenges outlined above, there are still accessible and compliant options that can help you achieve your financial goals.
Let’s look at some practical options:
- Direct stocks and bonds: US expats can invest in individual equities and bonds - both corporate and government
- Funds: US-domiciled funds and ETFs with UK reporting status can avoid PFIC issues for US investors and achieve more favourable UK tax treatment
- UK pensions: Many practitioners treat SIPPs as treaty-recognised pension schemes, allowing tax deferral on investment growth under the US-UK tax treaty; however, positions vary and depend on the specific facts and circumstances - always confirm with a US-UK tax specialist
- General Investment Accounts: these are flexible but require careful asset choice to avoid PFICs; Junior ISAs for US children may work if managed correctly and with expert advice.
Why specialist advice matters
The right advice can turn complexity into clarity. The key to successful investing as an American expat is working with advisers who understand both US and UK systems. At Canaccord Wealth, our specialist team are highly experienced in helping US citizens invest abroad. We construct portfolios using individual equities, bonds and US-listed funds approved for UK tax reporting.
As a client, you will receive tax reporting in both US dollars (for the US tax year) and sterling (for the UK tax year) and all assets are independently verified by a US-UK tax specialist.
For mixed-nationality couples, we can separate US and non-US assets to maximise flexibility and compliance. Because rules change often, regular reviews and robust reporting are essential to avoid costly mistakes like PFIC penalties or double taxation.
Take the next step
If you’re a US citizen based in the UK or planning a move to the UK, don’t let complexity hold you back – you’re not alone. Our team specialises in navigating the cross-border investment landscape, offering peace of mind and a clear path forward.
Want to find out more?
Contact us for a personalised review of your investment options and discover how we can help you build a compliant, tax-efficient portfolio tailored to your needs.
Frequently asked questions from American expats
Not always. While many practitioners treat SIPPs as treaty-recognised pensions under the US-UK tax treaty, this is not universally accepted and depends on your circumstances. A US/UK tax adviser should confirm how your SIPP will be treated for contributions, withdrawals and growth.
HMRC maintains a public register of funds with UK reporting status. Your investment manager should check each ETF before purchase to ensure it qualifies, as this affects how gains are taxed in the UK.
Most are not, because they lack UK reporting status. This means gains may be taxed at UK income tax rates rather than capital gains tax rates. Only certain exceptions qualify - your adviser should confirm which funds are acceptable.
Often yes. Many US expats can contribute to UK employer pensions or personal pensions such as SIPPs. Contributions may offer tax advantages in the UK, but their US treatment depends on treaty interpretation, contribution limits and your personal tax position.
Provided the underlying investments are compliant. General Investment Accounts, or GIAs, offer flexibility, but all fund choices must avoid PFICs. US expats typically use GIAs to hold direct equities, bonds and US-domiciled funds with UK reporting status.
In many cases, investment growth inside a UK pension may qualify for tax deferral under the US-UK tax treaty. However, contributions and withdrawals may be treated differently depending on your filing status, domicile and treaty interpretation.
If your expenses or long-term plans involve sterling, holding only USD assets can create volatility. Currency movements can significantly affect the value of your portfolio and your tax reporting. Many US expats benefit from a multi-currency approach.
Because the IRS classifies them as PFICs. PFICs are subject to extremely punitive taxation - often eliminating the benefits of long-term investing. This is one of the most important restrictions US expats need to understand.
