Plunging pound prompts US expats to triple UK investment
According to research by chartered accountants, Bambridge Accountants, the slumping value of sterling has unleashed a wave of investment from the 200,000 US expats living in the UK.
The firm, which specialises in handling the tax affairs of US citizens living in Britain, has seen a three-fold increase in the numbers of Americans making sizeable investments in the UK since the Brexit referendum.
The amounts being transferred range between $250,000 and $500,000, and are typically being used to snap up British property. 90% of investments were used to buy homes for Americans who had been renting in the UK, or – for those who already own a home here – to purchase an additional investment property.
The Pound has lost nearly a fifth of its value against the Dollar in the wake of the UK’s vote to quit the EU, making British property substantially cheaper for anyone with funds in the US.
American families are getting in on the act too, with many US expats investing in the UK doing so with the aid of contributions from parents and grandparents.
HMRC coffers will receive a boost from the flood of American investment in UK property, as expats buying a property not deemed to be their primary residence will be liable for a 3% stamp duty surcharge.
In addition, Americans registered as non-domiciled residents could trigger a greatly increased UK tax bill if they transfer large sums to Britain.
Alistair Bambridge, senior partner at Bambridge Accountants, explains: “Sterling’s abrupt fall means that for Americans living in the UK, British property is suddenly on sale. Whether they’re making a permanent home here or an opportunistic investment, buying a UK property now has a compelling logic. But that logic shouldn’t blind them to the tax implications – both here and back home.
The reach of Uncle Sam is famously long, and US citizens must complete a US tax return every year – wherever they are in the world. It’s essential that those making investments in Britain report it correctly to both the UK and US tax authorities.
Double taxation agreements exist between London and Washington to protect American citizens living in the UK from being taxed twice, but failure to properly declare investments they make here can result in a large fine in the US.”