Buying US Shares in an ISA | Investing in US Shares with a UK ISA (2024)

FAQs

Buying US Shares in an ISA | Investing in US Shares with a UK ISA? ›

Can you buy US shares in a Stocks and Shares ISA? You can buy and trade US shares in our Stocks and Shares ISA as you would with UK shares. Buying US stocks in an ISA may be a good idea if you want to diversify your portfolio. You can also enjoy potential returns from the US market.

You can hold foreign stocks and shares in a share ISA, as long as they are listed on a recognised stock exchange. There is a list of investments that ISAs may purchase at: Stocks and Shares investments for ISA managers.

However, they would pay no UK income tax for interest earned in an ISA. From a US tax standpoint, the same individual would pay either 24% or 22% in US income tax on the interest earned within an ISA.

You must tell your ISA provider as soon as you stop being a UK resident. However, you can keep your ISA open and you'll still get UK tax relief on money and investments held in it. You can transfer an ISA to another provider even if you are not resident in the UK.

If you want to move shares you currently hold directly into an ISA, you'll need to sell them first. This can be done through what is called a Bed and ISA transaction, rather than a direct transfer.

If you want to buy US shares the US government will charge you a tax on any income you earn from those shares as you are not a US resident or citizen. Chances are you'd prefer to pay less of this tax (known as withholding tax) on your shares, which is where a W-8BEN form comes in.

The US-UK tax treaty is an essential tool for US citizens living in the UK, offering protection against double taxation, reduced withholding tax rates, and clarity on tax residency. While the treaty provides numerous benefits, claiming them requires understanding and filing specific forms.

You do not pay tax on any dividend income that falls within your Personal Allowance (the amount of income you can earn each year without paying tax). You also get a dividend allowance each year. You only pay tax on any dividend income above the dividend allowance. You do not pay tax on dividends from shares in an ISA .

All income, interest and capital gains on your ISA do not need to be declared on your tax return.

What happens to my UK ISA if I move abroad? ›

As you have moved abroad, you can no longer contribute to the ISA after the end of the tax year that you moved. No-one else will be able to contribute to it either. You can still keep your savings in the ISA and get tax relief on money and investment held in it.

Unfortunately, the U.S. treats an ISA just like any other taxable account, meaning you are subject to U.S. income and capital gains tax on all activity within the ISA.

But you might be wondering what happens to your ISA, LISA or JISA accounts. Don't worry, they don't disappear when you leave the UK, but there will be restrictions on how you can use them. You will also be blocked from opening new savings accounts, setting up new pots within an ISA, and transferring any product to us.

You can transfer shares directly from one ISA account to another. Even better, when you do this, you do not use any of your ISA allowance, giving you the freedom to invest even more money.

You can pay into two ISAs in the same tax year provided they are different types of ISA. It would be fine to pay into both a cash ISA and a Stocks & Shares ISA in one tax year as long as you're below the £20,000 limit. You would not be able to pay into two different ISAs of the same type.

Putting money into an ISA

Every tax year you can save up to £20,000 in one account or split the allowance across multiple accounts. The tax year runs from 6 April to 5 April. You can only pay into one Lifetime ISA in a tax year. The maximum you can pay in is £4,000.

Can I invest in the S&P 500 from the UK? Yes, you can invest in the S&P 500 but you can't invest directly in the index. However, you can buy stocks and shares in the companies listed in the S&P 500. Another way to invest in an index is to buy index mutual funds or index ETFs that track the performance of the S&P 500.

Yes you can, for all shares in the main US and Canadian markets that are available as CDIs. A CDI (CREST Depository Interest) is a UK investment that represents an investment listed on an exchange outside the UK.

The second way to create an international portfolio is to buy shares in a company that trades on a foreign exchange. If you'd prefer this approach, AJ Bell offers dealing in 24 international markets including the US, Canada, France and Germany.