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Re: ER in the UK
Old 04-30-2006, 12:07 AM   #21
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Re: ER in the UK

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We are content to visit, but we are now investigating monthly rentals of a home in the Cotswolds or Lake District, May or September, when the tourist Hordes have vacated.
As an expat Brit and having spent many, many happy days, weeks in 'the Lakes', i would love to live there (in the summertime ). I have never stopped loving England. It's time i took a trip back there to see my family. Maybe this year.
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Re: ER in the UK
Old 04-30-2006, 05:33 AM   #22
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Re: ER in the UK

rrspike, I find it amazing to walk where History happened whether it be Hardy, Shakespeare, Tennyson, Hastings, the Roman Baths at Bath etc.

I think that there is , I know there is, a major differance between an ex pat going home and a Tourist, this is where our ancestors are and Jayne Eyre lives on those misty moors of Yorkshire.

The Tower of London was our playground, in those days they did not charge entry, we would shoot peas at the guards to make them move, hope those guns were't loaded.

The bombed ruins across the street from my house is now a Mosque.

Michael Caine is from my old neighbourhood, Bermondsey.
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Re: ER in the UK
Old 04-30-2006, 07:36 AM   #23
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Re: ER in the UK

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Originally Posted by rrspike
As an expat Brit and having spent many, many happy days, weeks in 'the Lakes', i would love to live there (in the summertime ). I have never stopped loving England. It's time i took a trip back there to see my family. Maybe this year.
I'm from Middlesbrough and I used to get on the bus and go to the Lakes with friends camping. I really miss misty N.Yorks mornings and the sound of the crows calling , also seagulls even though I live in Boston I rarely hear seagulls. In Middlesbrough I used to hear them all the time.
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Re: ER in the UK
Old 04-30-2006, 07:39 AM   #24
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Re: ER in the UK

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Originally Posted by nun
I'll qualify for accounts in the US and the UK as I'm a citizen of both countries.
Fidelity Japan does not accept Japanese citizens who happen to also hold a US green card or passport. If Fidelity UK has a similar policy, you may want to be circumspect about your dual citizenship.

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I'm going to ask Fidelity UK is their unit trusts qualify as QEF, but they probably don't. If not then if I investin the UK I'll do mark-to-market. Just one question, I'll have to pay capital gains and taxes on interest and dividends in the UK. Can I use those to offset the tax due to the US.
In general, yes. For PFICs in particular, there is a line on Form 8621 for foreign tax credit. Caveat: I have never tried to claim the foreign tax credit (haven't needed it yet), so there may be some limitations on how it can be used that I don't know about.

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If I do invest in a UK fund with say Fidelity I'll probably sell the shares at the end of the year and immediately repurchase them so I can show the cost basis and gain on my return.
I assume this would this be for UK tax purposes? If this is a marked-to-market PFIC, then this would of course be unnecessary for US tax purposes.

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I understand that the US taxes this like ordinary income. A couple of questions, how do they compute your tax rate/income. If I had a gain of say $10k and earned $40k in the UK I can exclude the $40 from US taxes so would the $10k be taxed at the $10k income rate?
If the $40k is earned income (wages), then you can exclude it from US taxes using the Foreign Earned Income Exclusion. If it is passive (investment) income, then you cannot.

If you can exclude the $40k, then the $10k would be taxed at the $10k rate. However, there has been talk of changing the rules so that it would be taxed at the $50k rate. Don't know what the current status of that proposal is.

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Also I'll have to pay UK capital gains on that $10k, can I offset this against the US tax?
As mentioned above, I believe so, in principle, though have not had to work through the details yet.

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Sorry if this is getting complicated, but I thought I'd ask as Bpp seems to have real world experience of this.
I would be only too happy if my limited, though hard-earned, knowledge in this area can be of use to someone else.

Bpp
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Re: ER in the UK
Old 04-30-2006, 09:01 AM   #25
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Re: ER in the UK

Well Bpp thanks for the info. It really sucks to have US citizenship sometimes.
I came to the US as a UK citizen in 1987 and I had no issues with UK taxation
of buying US based investments. If I'd been a US citizen going to the UK to work
how would I have invested my money given the US tax laws? It looks
like I'd have had limited options. I think these laws were designed to stop large
scale tax evasion, but they also make it difficult for working US expatriates to invest.
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Re: ER in the UK
Old 04-30-2006, 11:13 AM   #26
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Re: ER in the UK

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Originally Posted by nun
It really sucks to have US citizenship sometimes.
Were you forced to become a U.S. citizen? Is it possible that the benefits of U.S. citizenship outweigh the occasional tax/investment hassle?

Or would it be better to renounce U.S. citizenship in favor of eventually regaining your "tax emancipation"?
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Re: ER in the UK
Old 04-30-2006, 06:08 PM   #27
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Re: ER in the UK

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Originally Posted by nun
I think these laws were designed to stop large
scale tax evasion, but they also make it difficult for working US expatriates to invest.
Yup, I agree.

I actually don't see why non-resident citizens should be taxed in the first place, since we don't receive any government services. But for some reason I wasn't consulted.

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Re: ER in the UK
Old 04-30-2006, 06:38 PM   #28
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Re: ER in the UK

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Originally Posted by Nords
Were you forced to become a U.S. citizen? Is it possible that the benefits of U.S. citizenship outweigh the occasional tax/investment hassle?

Or would it be better to renounce U.S. citizenship in favor of eventually regaining your "tax emancipation"?
Not exactly forced, but it was recomended for my job and after 12 years living here I thought I should vote too. So I got US citizenship, however, when they asked me to renounce my UK citizenship to gain a security clearance I refused and eventually resigned.
The thing is that even as a long term resident [Green card holder] the IRS requires you
file for 10 years after you leave the country. If I were to give up my US citizenship for tax
reasons I'd still be taxed as a US citizen for 10 years. Also as I have 401ks etc having lived in the US for 18 years and I wouldn't want to make access to them or SS difficult.

Don't get me wrong, I've had a great 18 years in the States and love many aspects of the
place, but having US citizenship isn't really a big thing for me and right now its
proving to be a royal pain in the neck as I want to return home. But as the US is the only
country to tax by citizenship rather than residency it turmns out to be complicated.
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Re: ER in the UK
Old 04-30-2006, 08:15 PM   #29
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Re: ER in the UK

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Originally Posted by nun
If I were to give up my US citizenship for tax reasons I'd still be taxed as a US citizen for 10 years.
Not necessarily. I think that if, at the time of expatriation, you have a net worth below something like $2 million, and file the correct forms, you are basically released at that point. The rules have been changing on this recently, so it might be worth looking into it again if you are seriously considering this option. (Not that I think that one should have to surrender citizenship for tax reasons...)

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Also as I have 401ks etc having lived in the US for 18 years and I wouldn't want to make access to them or SS difficult.
I don't think you need citizenship for these. I know a retired Japanese lady, who used to live and work in the US but never became a citizen, and she receives US Social Security payments sent to her here in Japan.

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Re: ER in the UK
Old 04-30-2006, 09:34 PM   #30
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Re: ER in the UK

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Originally Posted by bpp
Not necessarily. I think that if, at the time of expatriation, you have a net worth below something like $2 million, and file the correct forms, you are basically released at that point. The rules have been changing on this recently, so it might be worth looking into it again if you are seriously considering this option. (Not that I think that one should have to surrender citizenship for tax reasons...)

I don't think you need citizenship for these. I know a retired Japanese lady, who used to live and work in the US but never became a citizen, and she receives US Social Security payments sent to her here in Japan.

Bpp
Very interesting, however, I get the feeling that if I were to renounce my US citizenship it might cause some other problems down the road. I'm sure there are strategies to cover my situation and I'm going to look at it with an international tax expert.
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Re: ER in the UK
Old 04-30-2006, 09:49 PM   #31
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Re: ER in the UK

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Originally Posted by nun
I'm sure there are strategies to cover my situation and I'm going to look at it with an international tax expert.
If you learn anything interesting, can you let me know? (Of course, if you prefer not to, because you are paying for the consultation, I understand.)

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Re: ER in the UK
Old 05-01-2006, 10:07 AM   #32
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Re: ER in the UK

I'll pass on any gems I learn.
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Re: ER in the UK
Old 05-01-2006, 10:30 AM   #33
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Re: ER in the UK

nun, in crazy Socialist Britain, will you be eligible for any kind of Pension from the UK Government, even though you have just moved back?
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Re: ER in the UK
Old 05-01-2006, 01:19 PM   #34
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Re: ER in the UK

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Originally Posted by Maximillion
nun, in crazy Socialist Britain, will you be eligible for any kind of Pension from the UK Government, even though you have just moved back?
With Tony Blair in power the UK is far from being socialist anymore..., but the answer to your
question is yes. As I have faithfully kept paying the National Insurance, UK equivalent of FICA, for the past 18 years I will get a UK state pension when I retire. Its actually a great deal, as a UK expatriate I get to pay a reduced rate, this year's bill was $170. As I also have 18 years of FICA I'll get SS too.
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Re: ER in the UK
Old 05-02-2006, 05:18 AM   #35
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Re: ER in the UK

nun, good for you, smart thinking.
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Re: ER in the UK
Old 05-02-2006, 07:42 AM   #36
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Re: ER in the UK

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Originally Posted by bpp

By the way, I just remembered something else that may be relevant to your situation. Back when I was starting to invest, I tried to open an account with Fidelity Japan, and they refused on the grounds that I am a US citizen, citing an SEC rule. This ticked me off enough to send an e-mail query to the SEC, who responded that since I don't live in the US, they would not necessarily consider me a "US person" for their purposes (note that this is different from the IRS's definition of "US person" -- the SEC is basically just saying here that they don't feel obligated to protect me), and that they would have no problem with me opening an account at Fidelity Japan. I relayed this to Fidelity Japan, and their response was, basically, "we don't care, the laws change all the time, and we have made the corporate decision that US citizens are too much of a hassle to deal with."

Of course, Fidelity in the US also refused to let me open an account, on the grounds that I am not a US resident. Joseph Heller would be proud.

Anyway, I don't know if Fidelity in the UK has the same policy as Fidelity Japan, but if they do, you might be out of luck anyway. You might want to ask them about this in advance.

Bpp
Bpp, I just got this from Fidelity UK

As per regulatory reasons (United States Securities Act 1933), it is not possible for clients residing in US to invest into Fidelity UK funds. Therefore, it will not be possible to classify the UK registered funds as Qualified Elected Fund with IRS.

I understand that if you are a US/UK dual citizen and a resident for tax purposes in UK,
you can invest into our funds if you hold a verifiable UK registered address. However, if you are currently residing in US, we will not be able to accept any investments from you.
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Re: ER in the UK
Old 05-02-2006, 08:55 AM   #37
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Re: ER in the UK

Hi nun,

Sounds like you are in luck then. They seem to be a bit more reasonable than their counterparts over here.

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Re: ER in the UK
Old 05-02-2006, 11:00 AM   #38
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Re: ER in the UK

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Originally Posted by bpp
Hi nun,

Sounds like you are in luck then. They seem to be a bit more reasonable than their counterparts over here.

Bpp
Yes, in the fact that I can get an account. However, buying Fidelity UK funds would be a bad US tax thing to do and a mess to report to the IRS. I might be able to buy them inside a pension scheme like the UK Stakeholder pension as these are covered by the UK Us tax treaty, although I'm still looking into this. I'll let you know what happens.
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