What are my options for investing in the style of an ISA outside of the UK?

07 April 2021

Question by Amy

I want to invest money for the future in the style of an ISA. I can't go for an ISA, as I don't think I will be a resident in the UK next year for a few years (moving due to work).

What are my best options?

Answered by Boring Money

Congratulations on the job Amy, hopefully an exciting move ahead. Whilst long term investment is important, you may wish to settle into your move and keep some cash handy, in case of unplanned costs or if you end up spending a bit more than you expected. An ISA is just a tax efficient way to invest in the UK, so there may be an equivalent in the country you are moving to. You could speak to a local tax adviser based in the country where you move to. They should be able to assist with explaining the applicable investment rules, if you have existing ISAs the tax status often isn’t recognised in the same way.

There may also be implications for the type of underlying investment. For example if you obtain a green card in the US, you would be considered a US citizen and potentially required to complete a return to the IRS. If you hold some of the popular UK based mutual funds, the taxation can be much higher compared to US equivalents.

It’s common to see offshore bonds used, which can offer investment growth without immediate tax implications. However, they are usually expensive and/or require significant initial amounts, the regulation can vary so they are at the more complex end of options.

As part of your relocation tax, investment and financial advice may all be relevant depending on your financial position. This should take account of your longer term expectation over where you are going to live, with retirement planning and pensions also being important considerations.

By necessity, this briefing can only provide a short overview and it is essential to seek professional advice before applying the contents of this article. This briefing does not constitute advice nor a recommendation relating to the acquisition or disposal of investments. No responsibility can be taken for any loss arising from action taken or refrained from on the basis of this publication.

Capital at risk. The value of investments and the income from them can fall as well as rise and the investor may not receive back the original amount invested.

Tax legislation is that prevailing at the time, is subject to change without notice and depends on individual circumstances. Clients should always seek appropriate tax advice before making decisions. HMRC Tax Year 2020/21.

Answered by

Boring Money