Expat Finance Matters

In April we hosted our fourth annual Expat Finance Matters in the UK seminar. The Club would like to thank Lauren Hurwitz ('08), for very kindly hosting the event at Moelis's offices.

Our speakers were:

  • Rory Dorman, Partner and Investment Advisor, Maseco (which provides financial advice to Americans in the UK); and
  • Matthew Edwards, Senior Tax Manager, Satis Asset Management.

Rory and Matt provided very helpful insights and advice for Americans alums who are now in the UK tax system. Alums should consult a tax advisor before acting on any of this advice, but some of the more interesting points that came out of the meeting included

  • Be careful about using investment services from high street banks: because of US tax issues it's unlikely that their products or advice will be suitable for you.
  • For example, ISAs are not tax-free from a US perspective. Very generally speaking, you should look to invest in US funds with UK reporting status only.
  • A growing number of US citizens are renouncing their citizenship to get out of the US tax system. In fact, the first quarter of 2015 saw a record number of people handing in their passports. However, this may not be the best financial solution: the US now imposes exit taxes on unrealized gains on your assets.
  • Don't rely on your accountant back home. Expats need international tax advice.
  • Don't be surprised if your bank decides it no longer wants your business. The Foreign Account Tax Compliance Act requires financial institutions to report on overseas bank accounts controlled by US tax-payers. Some banks have decided it's not worth their while to deal with the reporting hassle and will no longer accept American customers.
  • Obamacare, for all its positive points, imposes Medicare taxes on investment income, even on those outside the US. This is an income tax, so can't be offset with UK tax.

Rory also handed out Maseco's flyer: The Complete Financial Virgil for US Expats: 39 Steps to Smart Living in the UK. Some of you may have seen this at our 2015 tax event, but for those of you who haven't, it's worth a look for the practical advice it conveys in a humorous way: http://www.masecoprivatewealth.com/iq/pdf/MASECO_39Steps_WebPDF_edited240715_Printable.pdf

And a reminder: the Wellesley US/UK charitable trust is now up and running. This means that donations from US/UK taxpayers that come into the Trust will be treated simultaneously as gifts to a UK charity for tax purposes and gifts to a US charity (Wellesley).

This makes a very large difference both to Wellesley and to the alum making the donation. For example: you give a gift of £100 to the new UK Wellesley Trust, and provide it with a Gift Aid declaration. The Trust can then claim back £25 from HMRC. So although you wrote a cheque for £100, Wellesley receives £125. Additionally, if you are a 40% UK tax payer you can claim £25 yourself on your UK self-assessment tax return. Because you get your £25 back, the cost of the gift to you is £75.

Eileen Food is the part-time administrator of the Trust. She can be reached at eileen_flood@blueyonder.co.uk . We also have a document that explains the Trust and how it works. If you'd like a copy, please email Audrey Mandela (audrey@mandela.com).