Can I invest in US ETFs as a UK investor?

Thanks for your question!

It really depends on what you mean by "US ETFs" - either ETFs which include American companies or ETFs domiciled in the US.

There are a large number of ETFs investing in US companies available in the UK, including options from both Vanguard and iShares. This includes general trackers of popular indices such as the S&P 500 and NASDAQ, as well as more niche options that track US government bonds and specific sectors.

For example, the UK iShares website features 222 different US ETF options that are available, and can be bought by via mainstream platforms such as Hargreaves Lansdown and AJ Bell.

However, it's worth bearing in mind that it gets a bit trickier if you're a UK investor trying to trade an ETF (or other investment) which is domiciled in the US. For example, if you're buying an S&P 500 ETF which is listed in New York and not on the London Stock Exchange.

This is because direct ownership of American investments - such as a US-listed ETF, rather than a duplicate version listed in the UK - means you're directly generating income from American businesses and therefore exposes you to the exceedingly complicated US tax system.

Primarily, withholding tax at 15% of the dividends or income earned from US assets could be due. It's also worth noting that you will still pay all the usual UK taxes if you're holding those investments outside an ISA on top of any US tax too!

Good news: you can usually tell where a fund is domiciled by checking its Key Investor Information Document (KIID) or factsheet. It will state the fund’s domicile or country of registration. If it says "United Kingdom" or "UK", for example, you’re good. You can also look at the fund’s ISIN code: UK-domiciled funds typically start with GB.

For illustrative purposes only.

You'll find that, thankfully, most US-listed ETFs aren’t eligible for many UK investors to purchase on platforms over here anyway. There will typically be a UK-listed equivalent which gives you access to the same ETF but without the tricky tax issues.

If you do happen to come across a US-listed ETF on a UK investment platform, if it doesn't qualify as a “reporting fund” under HMRC rules, any gains you make will be taxed as income, not capital gains. This means your tax bill will match your marginal rate of Income Tax (potentially up to 45% for additional rate taxpayers).

If you are investing in or receiving income from US assets, you may be prompted by your platform or provider to complete a W-8BEN form. This is used to inform the US tax authorities that you are not a US citizen and therefore reduce your liability.

You can read more about W-8BEN forms and when you need to complete one here.

Hope this helps!