• Expats

Your Financial Emigration Plan for moving to the US

Posted on: 19-04-2021

 

There are over 700,000 British expats living in the USA right now. Only Australia attracts more Brits working and living abroad. Moving abroad, as for example, to the US requires a financial emigration plan.

To expats who secure the right to work there, America can offer beautiful weather, a generous standard of living, the real possibility of landing a Green Card, and the chance to retire in the sun. Despite the travel complications created by the coronavirus pandemic, the appeal of the United States (US) is unlikely to wane.

So, what do you need to sort out financially to make the move? Is there anything you don’t need to sort out? Moving abroad to work offers expats huge rewards – but the re-organisation of your financial life will be total. You need a Financial Emigration Plan (FEP).

What is my Financial Emigration Plan (FEP)?

Best practice is to develop a single point of organisation which acts as your guidebook. This involves 3 steps:

1) As you would normally, you research your financial options; and using expert professional advice is the only way to do this without making mistakes.

2) Based on your findings, you write a lot of lists and put them together in one pack. This is your FEP. This should be in hard copy (in an actual binder) and backed up on computer. Central to your FEP is your master list of all the other lists! Your lists should cover every single action you need to take in key financial areas such as pension, taxation, and banking.

3) Check with a professional that your lists make sense and tick them off, one by one, as you action them.

Why not use your FEP as the centrepiece of your whole emigration strategy? Aside from your finances, you will also need to be mastering your residency status and visa requirements obviously, as well as vital practical issues such as housing for you and your family and education for the kids. Include everything that needs to be done as a list, and it will never be overlooked!

Meanwhile, below we give a brief overview of the 2 big FEP issues for Brits going to the USA: pension and taxation. This means that pensions are part and parcel of your whole expat taxation challenge.

Should I change my UK pension arrangements before I go to the USA?

You may be able to bundle your UK work and private pensions into one tax-efficient package and access it from the USA. There are powerful tax incentives to do so. But whether you should or not depends on your individual circumstances. Only an Independent Financial Advisor (IFA) can help you to make this decision. When you live and work in the USA, you will be able to receive payments from your UK State Pension. And you will be able to top up your National Insurance Contributions (NIC) if you need to.

Taxation

The US tax system is demanding. All Green Card holders in the USA are required to pay tax to the US government. But, of course, you can work in the USA without a Green Card if you have secured an appropriate work visa. Even then, if you meet the IRS’s Substantial Presence Test, you will need to file IRS Form 1040 detailing ALL your global income, including any in the UK, taxed at source by the UK government.

Expats dearly want to avoid paying high taxes to both the USA and the UK – but this can’t happen without expert assistance.

Don’t forget to tell the HMRC you are leaving! Send them BY POST a form P85; as the Gov.uk website notes ‘you cannot use HMRC’s online services to tell them you’re leaving the UK.’ (HMRC)

Three top tips for general USA emigration

1) Healthcare: remember that provision is private in America. You will need to get private health insurance. Usually, expats accept any health package offered by their job – and supplement it if they can afford to. If they don’t have employer-based healthcare, they should go to healthcare.gov and look at options through the Affordable Care Act (“Obamacare”).

2) Shopping: prices are generally listed without state or federal taxes.

3) The ‘Big Move’: Use a provider from the British Association of Removers (BAR) who have regulated transnational experience.

Where is guidance from the British Government on moving to the USA?

If you consider moving to the US, guidance from the British government would be essential. Click on this useful link to get more information.

Choose Archway Private Wealth

Our team at Archway Private Wealth consists of highly qualified financial advisers with many years of experience in the competitive financial world. Our aim is to understand our clients’ retirement planning needs and give them the right advice. Get in touch with us today.