Relatively new expat here in the States, UK Citizen, moved here May 2022.
Have just gone to file my first tax form and realised I have around 100k of PFICS in my Vanguard UK account.
I have gone down that rabbit hole over the last few days and my head is spinning.
I plan to sell these ASAP and take the hit (hopefully not too big as the gains are marginal at this point) just to get the pain out of the way and avoid onerous reporting going forwards.
My question is around what to do over the next few years, given that we will DEFINITELY be leaving the USA in 3-5 years to start a family in the UK. We expect to save around 50k per annum that we want to invest long term for future plans.
I have come to the conclusion that unless I build a single stock portfolio in the UK (which I deem as too risky and cumbersome), I will need to move my money over to the US and invest in the Vanguard funds here.
I have a few options as to how this would work when we leave. I’m on an L1 VISA.
I would be a non covered expat (<$2m net worth).
- Sell these in the final year of our time here, I shouldn’t have to pay exit tax?, just 15% Capital Gains (maybe less If I can time my leaving early in the year to make my annual earnings lower).
- Leave the USA, then sell all the funds and pay UK capital gains tax.
- Leave the USA, keep the vanguard account open, and sell bit by bit to stay under the annual UK Capital Gains tax limit (12K or so right now) and ultimately pay no tax – this may take years, but that is fine with us as we don’t need access to the lump sum. I am particularly interested in this, but want to know if this is legal and whether I would run into problems with keeping my Vanguard account open once I leave?
- Completely ignore all of the above and just declare my UK assets as normal stocks on 8938 form. Understand this is probably bad advice that nobody here is going to suggest, but I have heard financial advisors suggesting this in my readings.
- Anything else I may have missed that will let me keep funds in UK during this time, to get them back to the UK relatively tax free if I move them over the Vanguard US.
Ultimately, if I moved assets here, I could have 3-500k in a Vanguard USA fund when we leave. How can I get that money back to the UK without paying a huge amount of tax on gains (could be north of 100k gains by then)?
Apologies for the long post, appreciate any input anybody can provide.
