"Move" to UK for 3 years?

[truenorth418]

A quick update:


BOTTOM LINE: If I thought I would *never* seek medical care in the US, I might grab an expat policy. But until that is absolutely true, I think it makes sense to keep hold of US coverage and supplement with "travel" secondary insurance.


Better to spend a bit more while exploring possible life options that to have massive non-buyer's remorse later!

Agree. It’s important to research all options and consider various scenarios.

It sounds like one of the scenarios that troubles you is the possibility of a chronic disease or cancer where you would need to remain in place for an extended period of time for treatment.

If that were to happen to you, yes, you might want to return to the US for treatment, but the limitations imposed by an international expat policy (90 or 180 USA limits) might make that infeasible.

On the other hand, the international expat policy would provide you with affordable treatment options virtually anywhere in the entire world. The USA might not be the place where you would receive the best treatment, depending on the disease or condition. Under such unfortunate circumstances, you might want to have more choices than what would be available to you under your ACA policy from whatever US state you are domiciled.

 

[brett]

IF you have a parent or grandparent born in the UK you might qualify for special status.

We both obtained Certificates of Patriality years ago when we went to the UK and Europe on an extended trip. It entitled us to work immediately, access health care, etc. Just about everything except vote. We never did work or access the NHS.

My son did the same three years ago when he went to live and work in the UK for a year. Applied and was granted the status base on his grandparents place of birth (UK). He got off the plane, got a job, had his NIS number immediately.

Not certain how it impact NHS waiting times but f you do meet the program it might be worth looking into. We are Canadian, so I am unsure if this option only applies to citizens of a Commonwealth country.

 

[KrisS]

Brexit, health & travel

Hi. Also a dual citizen and in the UK 12 years. I see you are going down the insurance route now, but there is benefit to considering UK residency depending on you specific scenario.

As mentioned, a UK address needed to register with a GP. As a citizen, you can return and not, as of this writing, be subject to any kind of income test. Lots of ways to make this work cheaply.

Also as a resident UK citizen, you can, as of this writing, still get a European Health Card which allows for access to health services (often for a small fee) in the EU. Guessing the ability to get one will go away soon. However, you would be buying insurance as a UK , not US citizen and there are benefits to this.

For 3 years, you can skate a bit on the tax (you can be non-dom, still paying global tax but less scrutiny at 3 out of 10 years, but it is, as of this writing, a cliff on how you residency is treated). You also have to consider what needed to break residency with you current US state for tax purposes. A longer stay will require some significant planning (you can't own mutual funds for example). Depending on you asset base, advice will be needed. If your taxes are already complex, it will be expensive.

Moving money has tax consequences as well, but a weak pound and good planning can work to your benefit.

So, it is a question of how much time you plan to spend in the UK.

That said, what has not been mentioned is that you do need to really think about is Brexit. Mostly unknowns, but at this writing, the current plan is for 3rd country rules to apply to UK citizens as of Jan 2021. This means you can be in the Schengen area 90 out of 180 days. Net net, your UK citizenship will soon not be delivering the benefits of free travel (we have a house in France so watching this very closely. There are a lot of forums too). There is database sharing, so we think that it is not viable to try to enter Schengen zone countries using 2nd passport once out of days, but not 100% verified and may depend on country (not because of rule differences but because of how good the IT systems are). You can apply for a visa for a longer stay, but proof of healthcare and funds required.

Hope this helps.

 

[Alan]

Moving money has tax consequences as well, but a weak pound and good planning can work to your benefit.

Could you expand on this a little more. We are dual UK/US citizens living in the UK and am not aware of any tax consequences moving money between countries. (We have moved hundreds of thousands of $s to buy houses here in the UK)

For 3 years, you can skate a bit on the tax (you can be non-dom, still paying global tax but less scrutiny at 3 out of 10 years, but it is, as of this writing, a cliff on how you residency is treated). You also have to consider what needed to break residency with you current US state for tax purposes. A longer stay will require some significant planning (you can't own mutual funds for example). Depending on you asset base, advice will be needed. If your taxes are already complex, it will be expensive.

Good point on mutual funds but it is perfectly okay to own them while living in the UK. The problem is that all the dividends, capital gains etc are treated as regular income. We converted our taxable mutual funds to ETFs which are recognized by HMRC (we only have equity ETFs outside our IRAs, plus Roth IRA withdrawals are tax free in both countries). For us, the first £3k of qualified dividends are tax free then taxed at 7%, the first £10k of cap gains are tax free then taxed at 10%.

US SS is tax free in the US but fully taxed in the UK.

If you do mess up with the non-Dom status and become "not ordinarily resident" then you lose access to the NHS.

Almost certainly best to use a dual qualified tax preparer for a year or 2 but many ex-pats do it themselves from year 1.

 

[KrisS]

Tax & non-dom

I should have been more specific and said moving money "can" have tax consequences.

If you are resident non-domiciled and opted to pay on the remittance basis, cash movements are taxed as income. Non-dom resident status does not impact NHS access. There are a lot of scenarios where this status makes a lot of sense, particularly if there are complex estate issues, but it's not the standard to be sure. My rule is for anyone not able to do their own US taxes get advice on UK environment.

Owning mutual funds is actually a USA restriction. There is a time horizon and, as you say, can transfer to ETFs but
it's a painfull process depending on your portfolio and not everything has a UK recognised ETF option. However, if you are still spending time in the US and maintaining more of a dual resident footprint, you would not need to worry about it. So, aa stated, only a concern if 3 years turns into more than 7 (which happends quite a lot it seems).

 

[Alan]

Owning mutual funds is actually a USA restriction. There is a time horizon and, as you say, can transfer to ETFs but
it's a painfull process depending on your portfolio and not everything has a UK recognised ETF option. However, if you are still spending time in the US and maintaining more of a dual resident footprint, you would not need to worry about it. So, aa stated, only a concern if 3 years turns into more than 7 (which happends quite a lot it seems).

Not sure I understand this. Are you saying that the USA does not allow you to hold mutual funds in the USA if you live overseas? Not trying to be difficult here, just trying to understand as I’m certainly not an expert by any means.

 

[braumeister]

This area seems to be a bit murky. Here is one take on it:
Why are non-U.S. Residents Restricted from Owning U.S. Mutual Funds?/

As recently reported in the Wall Street Journal and other media outlets, many U.S. mutual fund companies recently introduced new policies preventing their funds from being purchased by non-U.S. residents, including Americans abroad. Many expats are surprised to learn that rules barring the sale of most U.S. registered mutual funds to non-residents are decades old. Previously, these long-standing limitations on ownership were seldom enforced. Recently, however, mutual fund companies modified due diligence procedures to compel more rigorous compliance with existing rules. Stepped-up enforcement of existing rules reflects the new environment of enhanced cross-border compliance and regulation among banks and brokerage firms.

Mutual fund distribution agreements typically mandate that mutual fund owners reside domestically in the United States for two main reasons. First, U.S. fund groups are not allowed to solicit overseas business for their SEC-registered funds, even from U.S. expatriates. Offering shares of mutual funds to non-domestic clients could potentially violate the laws of any country in which an investor or prospective investor in a fund is resident or domiciled. Second, mutual funds may make tax treaty claims on their holdings, which require funds to certify all shareholders are resident in the United States.

 

[Alan]

This area seems to be a bit murky. Here is one take on it:
Why are non-U.S. Residents Restricted from Owning U.S. Mutual Funds?/

Thanks for that, I had no idea, since owning US mutual funds is a bad idea anyway as they are treated as PFIC’s by HMRC.

We do own and trade mutual funds within our IRAs and Roths, but being inside a pension wrapper is okay, I think.