A guide to American expat investment options for US citizens living in the UK
Laurence Leigh, Investment Manager with extensive experience in US-UK wealth management, discusses why investing as an American living in the UK can seem complex and offers practical guidance to get it right.
Investment Manager
19 Nov 2025
|Quick summary: A guide to American expat investment options
Navigating investment options as a US citizen in the UK isn’t just complex - it can be truly 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.
• How does paying tax as a US expat in the UK work?
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 ISAs are tax-free in the US, thinking US-based assets automatically meet UK rules, overlooking currency risk and trying to manage investments without guidance - all of which can lead to unexpected taxes or compliance issues.
• What are the investing options as an American expat 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 does a US expat in the UK need specialist advice?
US expats face complex US and UK tax rules and the right advice ensures compliance while maximising investment potential. Specialists can structure portfolios, provide dual reporting in dollars and sterling, separate US and non-US assets for mixed-nationality couples and help avoid costly mistakes like harsh penalties or double taxation.
Paying taxes as a US expat in the UK
Unlike most countries, US taxes are based on citizenship. So even if you’ve settled in the UK, you still have to file a US tax return.
At the same time, 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
As an American expat 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 PFICs (Passive Foreign Investment Companies), 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 for people 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 what you can buy are restrictive and often confusing. US expats can usually access only US-listed funds, direct stocks and bonds, but UK reporting requirements can limit the availability. Without guidance, it’s easy to end up with not enough options or compliance issues.
What are your options?
As a US expat, you shouldn’t be put off from investing in the UK. 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 constructs 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. And 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 an American expat in 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.
Contact us today 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.
