Invest with us | Vanguard UK Investor (2024)

FAQs

Can I invest in the UK as an American? ›

Limited Options in the UK

One big problem for Americans in the UK is that most financial companies don't want to work with them. This is mainly because of different rules and extra paperwork required by the US, making it hard for them to find good investment choices.

What is the UCITS equivalent of Vanguard S&P 500 (VOO & VFIAX)? The European and UK UCITS Equivalent to VOO ETF or VFIAX Mutual Fund is Vanguard S&P 500 UCITS ETF, with accumulating share classes in GBP and EUR, and distributing share classes in GBP, EUR and CHF.

The Vanguard Personal Investor platform offers a comprehensive service designed specifically for UK residents.

You can buy shares in US-listed companies from the UK, but due to local and European regulations, you're not allowed to purchase US-listed exchange-traded funds (ETFs) in the UK.

The problem with this form of investment for US citizens, is that funds in the UK are classes of “non-US pooled investment products”. The IRS classifies these as Passive Foreign Investment Companies (PFICs), which they really don't like and therefore charge a highly punitive level on them.

UK residents aren't subject to paying tax on US shares from the UK, but they do have to pay a tax on any dividends or income received from those US stocks. This tax is called a withholding tax (WHT) and it's 15%. Any dividends or income received from US stocks must receive this WHT 15% tax.

Best alternative to Vanguard if investing in shares

Vanguard only allows you to invest in its own funds and so investors keen to invest in individual stocks need to look elsewhere. Freetrade is a good alternative to Vanguard and investors can access over 6,000 shares.

EQQQ is available in different versions for different stock exchanges (London, Germany, Milan, Switz, etc), but it is run by the same company as QQQ — Invesco. Its performance is almost identical to QQQ, so if you want to invest in the US NASDAQ index, it's a good choice.

The equivalent of the S&P 500 in the UK is the FTSE 100, which tracks the performance of the 100 largest companies on the London Stock Exchange. Like the S&P 500, the FTSE 100 is also used as a general yardstick to measure the relative health and performance of the UK stock market and wider economy.

When you buy shares, you usually pay a tax or duty of 0.5% on the transaction. If you buy: shares electronically, you'll pay Stamp Duty Reserve Tax ( SDRT )

Does Vanguard accept non US citizens? ›

Please note: You need to be a U.S. citizen with a U.S. mailing address to open an account. If you live or work outside the U.S., please check out our international site.

Any investor transferring money out of a given fund may not transfer money back into that same fund for 30 days. Fund purchases made through payroll contributions, loan payments or rollovers, or by any other means besides an exchange will not fall under this restriction.

This is due to regulations that require 'Key Information Documents' (KIDs) to help them better understand the products they are buying. U.S.-registered ETFs do not contain this document, which led to the restriction on trading U.S.-registered ETFs in Europe.

However, US government bonds are accessible to UK residents through the secondary market or via brokerage services. An easy way to buy bond issuances, especially outside of your own country, is through your broker – and this is also the place to go for secondary market trading.

There are no restrictions on foreign investment in the UK and non-UK resident individuals investing in the UK are generally only subject to UK tax on limited UK source income and gains. Tax, of course, is not the only consideration when investing in a foreign jurisdiction.

There are no legal restrictions on American expats buying property in the UK. Foreigners and non-residents can also get a mortgage in the UK. Americans with less than two years' residency in the UK and without a job may face more challenging conditions, including a bigger deposit to secure a UK property mortgage.

Non UK residents cannot normally open an ISA. Expats may be able to keep their ISA, but they cannot add any more funds to it or open a new one, as long as they are not resident in the UK. We cannot advise you with regards what to do with your existing ISA. You may need to speak to an financial adviser.

While it is not possible to gain British citizenship immediately by investing in the UK, it is possible to get on a fast track to citizenship by choosing the right visa route.