Moving From the UK to the US Financial Planning Checklist

Before moving from the UK to the US, review your tax residence, pensions, investments, bank accounts, property, insurance, estate planning and future residence plans.

A proper checklist should usually include:

• UK tax residence
• US tax residence
• green card status
• substantial presence test
• state tax residence
• UK pensions
• defined benefit pensions
• defined contribution pensions
• SIPPs
• ISAs
• GIAs
• investment funds
• offshore bonds
• UK property
• UK bank accounts
• US banking access
• currency
• life insurance
• health insurance
• wills
• trusts
• beneficiaries
• business interests
• employer stock
• retirement income
• future return-to-UK planning

The IRS says a non-US citizen can be treated as a US resident alien for tax purposes if they meet the green card test or the substantial presence test.

GOV.UK says UK residence status affects whether UK tax is due on foreign income.

That means a UK-to-US move can create a dual-system planning problem.

You may be leaving the UK tax system fully, partially or only temporarily, while entering the US federal and state tax systems.

The planning point is simple.

The best time to review UK-to-US financial planning is before you become US tax resident, not after the move has already changed the tax and reporting position.

Moving from the UK to the US can turn ordinary UK assets into complicated US tax and reporting issues.

The aim is not to panic.

The aim is to review the structure before the move.

1. Review US tax residence

The first question is when US tax residence starts.

This may depend on:

• green card status
• substantial presence test
• visa type
• day count
• arrival date
• treaty position
• first-year choice
• spouse status
• payroll start date
• state residence
• intention to remain
• future departure plans

US tax residence can affect worldwide income, investments, pensions, trusts, companies and reporting.

2. Review UK tax residence

Leaving the UK may create UK tax issues.

Review:

• departure date
• UK statutory residence test
• split-year treatment
• temporary non-residence
• UK-source income
• UK property
• UK pensions
• UK capital gains
• offshore income
• remittances where relevant
• double tax relief
• expected return date

Someone leaving the UK for the US may still have UK tax exposure, especially where UK property, pensions or business interests remain.

3. Review state tax

The US is not just one tax system.

You may move to a state with its own income tax, domicile rules, estate tax or reporting issues.

Review:

• destination state
• income tax
• capital gains tax
• estate tax
• domicile rules
• days in state
• property plans
• remote work
• employer withholding
• business interests
• retirement income treatment
• future moves between states

Moving to Florida is not the same as moving to California or New York.

4. Review UK pensions

UK pensions can be one of the most important assets to review before moving.

You may have:

• defined contribution pensions
• defined benefit pensions
• SIPPs
• workplace pensions
• old employer pensions
• pension consolidation decisions
• pension transfer questions
• tax-free cash decisions
• planned drawdown
• annuity options
• State Pension entitlement

Review:

• whether contributions will continue
• whether the provider accepts US residents
• whether investments inside the pension are suitable
• whether withdrawals may be taxed
• whether treaty treatment is relevant
• whether pension transfers are still appropriate
• whether defined benefit advice is required
• whether currency should remain in sterling
• whether retirement income will be needed in dollars

5. Review ISAs and GIAs

ISAs are tax-efficient in the UK, but they are not automatically tax-efficient in the US.

Before moving, review:

• Stocks and Shares ISAs
• Cash ISAs
• Lifetime ISAs
• Junior ISAs
• GIAs
• OEICs
• unit trusts
• investment trusts
• ETFs
• offshore funds
• accumulated gains
• income
• US reporting
• PFIC exposure
• UK reporting fund status
• account provider restrictions

A UK portfolio that looks perfectly sensible in the UK may be highly inefficient for a US tax resident.

6. Review offshore bonds and insurance wrappers

Offshore investment bonds, foreign life insurance policies and investment-linked insurance structures should be reviewed before US residence starts.

They may create:

• US tax issues
• reporting obligations
• insurance classification questions
• PFIC exposure
• foreign trust questions
• liquidity issues
• surrender timing decisions
• estate planning consequences

This is an area where specialist tax advice is essential.

7. Review trusts, companies and business interests

Trusts and private companies can become especially complex for US residents.

Review:

• family trusts
• offshore trusts
• excluded property trusts
• bare trusts
• discretionary trusts
• UK companies
• foreign companies
• partnerships
• LLPs
• carried interest
• founder shares
• EMI options
• shareholder loans
• retained profits
• reporting obligations

US tax residence can change the reporting and planning around structures that were previously straightforward.

8. Review banking and currency

A move to the US usually creates a need for both sterling and dollar planning.

Review:

• UK bank accounts
• US bank accounts
• credit cards
• mortgage payments
• cash reserves
• currency transfer costs
• emergency funds
• expected US spending
• UK liabilities
• pension currency
• property income
• tax payments
• school fees
• relocation costs

Currency should be planned, not left to chance.

9. Review insurance and health cover

Insurance needs often change on a US move.

Review:

• health insurance
• employer benefits
• life insurance
• income protection
• disability cover
• critical illness cover
• long-term care exposure
• mortgage protection
• policy jurisdiction
• premium currency
• whether UK policies remain valid
• whether US cover is required

Do not assume UK protection policies work cleanly after moving to the United States.

10. Review estate planning

A UK estate plan may not be enough for a US resident.

Review:

• UK wills
• US wills
• trusts
• powers of attorney
• guardianship
• beneficiary forms
• pension nominations
• life insurance beneficiaries
• UK inheritance tax
• US estate tax
• state estate tax
• non-US spouse issues
• children’s residence
• property ownership
• liquidity

Estate planning should be reviewed before the move, particularly for HNW families, business owners and mixed-nationality couples.

11. Review future residence

Your UK-to-US move may be temporary or permanent.

The plan should consider whether you may:

• remain in the US long term
• return to the UK
• move to the UAE
• move to Europe
• retire in another country
• keep UK pensions
• keep UK property
• retain UK investments
• become a green card holder
• relinquish a green card later
• pass assets to US, UK or non-US beneficiaries

Good cross-border planning is built around likely future moves, not just the first move.

This page is for general information only and does not constitute personalised financial, tax, legal, immigration, pension, retirement, investment, estate planning, insurance, US tax, UK tax, state tax, local tax or currency advice.

Moving from the UK to the US, UK tax residence, US tax residence, green card status, substantial presence, state tax, UK pensions, SIPPs, defined benefit pensions, ISAs, GIAs, PFICs, offshore bonds, trusts, companies, property, banking, insurance, estate planning, wills, beneficiaries, currency and future residence depend on personal circumstances and may change.

US tax advice should be taken from a suitably qualified US tax adviser or CPA. UK tax advice should be taken from a suitably qualified UK tax adviser.

State tax, legal, pension, investment, immigration, insurance and estate planning advice should also be taken where relevant.

Financial planning should be coordinated with tax, legal, immigration, investment, retirement and estate planning advice where appropriate.

Do not move, sell, transfer, contribute, withdraw, roll over, restructure or reinvest assets without reviewing US, UK, state, tax, investment, pension, estate, insurance, currency and retirement planning implications.

Investing involves risk. Investment, pension and retirement account values can fall as well as rise, and you may get back less than you invest.

Currency movements can affect investments, pensions, retirement accounts, property, tax liabilities, income and future spending.