Can a US resident keep a UK ISA? What changes once you move to the US

If you’ve moved to the US (or have become a US tax resident) and still hold a UK ISA, you’re in a not uncommon position. This question usually comes up when a platform asks you to confirm your residency, requests a W-9/W-8 form, restricts what you can buy, or hints that your account may be closed.

Here’s the straight answer:

Yes, you can keep a UK ISA after moving to the US. But, you generally cannot add new money once you’re no longer a UK resident, the US does not recognise the ISA as “tax-free.” and many of your holdings could be damaging for your finances and tax position.

Those last two points are where most people get caught out. The ISA rules are relatively simple. The US overlay is not.

This blog explains what changes, the common traps, and what a sensible next step looks like.

Quick summary

• You can keep your ISA open after you move abroad, and you’ll still receive UK tax relief on the holdings inside it.
  
• You cannot usually contribute new money once you become a non-UK resident (limited exception: certain Crown employees and their spouse/civil partner).
  
• You must tell your ISA provider as soon as you stop being a UK resident.
  
• You can transfer an ISA to another provider even if you’re non-UK resident, but providers may refuse US-linked clients as a policy decision.
  
• If you’re a US person for tax purposes, you may have US reporting requirements (e.g. FBAR and/or Form 8938 depending on thresholds) and PFIC exposure depending on what the ISA holds.

1) The UK rules

If you opened an ISA while UK resident and then move abroad:

You can keep the ISA

You are allowed to keep your ISA open, and it can continue to benefit from UK tax relief on the money and investments held within it.

You generally cannot pay more money into it

Once you become a non-UK resident, you cannot put money into the ISA (unless you qualify under the narrow Crown employee exception).

You must inform your ISA provider

HMRC guidance is explicit: you must tell your ISA provider as soon as you stop being a UK resident.

ISA transfers are still allowed

HMRC also states you can transfer an ISA to another provider even if you are not resident in the UK.

Important reality check: HMRC allowing something and a provider being willing to do it are not the same thing. US-linked clients are often the point where providers draw a line.

2) “US resident” vs “US person for tax purposes” (don’t mix these up)

People say “US resident” casually, but what matters is whether you are treated as a US person for US tax purposes.

Common examples include:

• US citizen
  
• Green card holder
  
• Someone who meets US tax residency tests (e.g. substantial presence)
  

This distinction matters because platform restrictions and US reporting obligations generally attach to US tax status, not just your mailing address.

3) What changes once you move to the US

A) You lose the ability to subscribe to the ISA (UK rule)

This is the clean part: if you’re non-UK resident, stop subscriptions and remove any standing orders that might accidentally continue. HMRC’s position is clear.

B) Your provider may restrict what you can hold or buy (platform policy)

Even if the ISA stays open, you may find:

• certain funds become unavailable,
  
• new trades are blocked,
  
• the account is limited to “sell only” or
  
• the provider asks you to transfer elsewhere.
  

These are usually commercial/compliance decisions tied to FATCA and US reporting complexity (more on that below).

C) “Tax-free” becomes a UK-only concept (US overlay)

A UK ISA is a UK wrapper. The US may still tax income/gains inside the ISA, depending on your circumstances. The ISA’s UK tax benefits do not automatically carry over into US tax treatment.We’re not providing US tax advice in this blog, but you should understand the direction of travel: many US taxpayers do not receive the same “tax-free” outcome on an ISA that they receive in the UK.

4) The two big US issues: reporting and PFICs

4.1 Reporting: FBAR (FinCEN 114)

FinCEN states that a United States person with a financial interest in (or signature authority over) foreign financial accounts must file an FBAR if the aggregate value exceeds $10,000 at any time during the calendar year.

That threshold is not “per account”. It’s aggregated across foreign accounts.

4.2 Reporting: IRS Form 8938 (FATCA)

The IRS explains that Form 8938 is used to report specified foreign financial assets if the total value exceeds the relevant reporting threshold (thresholds vary by filing status and where you live).

4.3 PFICs: the trap inside many Stocks & Shares ISAs

If your ISA holds pooled non-US investments (most UK/EU collective funds), the US will likely treat them as PFICs (Passive Foreign Investment Companies).

The IRS states that US persons who are direct or indirect shareholders of a PFIC may need to file Form 8621 in various situations (distributions, gains on disposal, elections, or annual reporting requirements).

Here’s the point we want to be blunt about:

PFIC problems are often unavoidable for US taxpayers investing in non-US fund structures.

This is not about “bad investing” or “poor behaviour”. It’s a structural mismatch between US tax rules and how many non-US funds are built.

And PFIC pain often appears at the worst possible moment: when you sell, switch, transfer to cash, or are forced to move platforms.

5) What usually happens in real life

Scenario 1: ISA remains open, but no new contributions

This is the “normal” outcome aligned to HMRC rules for many non-UK Residents

Scenario 2: ISA remains open, but investment options are restricted

Common with US-connected clients especially. You keep the wrapper but lose practical flexibility.

Scenario 3: Provider wants you to transfer out or closes the account

This can happen even if you’re following HMRC rules perfectly. It’s usually a provider policy and especially common around US-linked servicing.

If you’re facing Scenario 3, the wrong move is panic-selling without understanding what you hold and what that implies for US reporting/tax.

5.1 The practical solution we use for US residents (ISA transfers + PFIC-safe investing)

If you’re a US tax resident (or otherwise a US person for tax purposes) and your provider is restricting your ISA, the goal is not just “keep the ISA open”.

The goal is to transfer the ISA to a workable home, with the right regulatory support, and then ensure the investments inside it are not built on structures that create PFIC problems for US taxpayers.

In practice, that often means:

• transferring using the official ISA transfer process (not withdrawing), and
  
• investing via US-compatible holdings (typically US-domiciled securities) rather than UK/EU pooled funds that may be treated as PFICs.
  

This is precisely the trap most people fall into: the ISA rules are easy; it’s the US overlay and the investment structure that cause the damage.

6) A sensible “next steps” checklist

Step 1: Confirm your status (UK and US)

• Are you non-UK resident under UK rules?
  
• Are you a US person for tax purposes?
  

Step 2: Ensure subscriptions have stopped (if non-UK resident)

HMRC does not allow new contributions once you’re non-resident (outside the exception).

Step 3: Tell the provider (and keep the paper trail)

HMRC requires you to notify the ISA provider when you stop being UK resident.

Step 4: Review the ISA holdings (this is where the risk sits)

• Cash ISA vs Stocks & Shares ISA
  
• Any pooled funds (UK/EU funds can be where PFIC issues arise)
  

Step 5: Decide whether keeping the ISA is still rational

A decision framework we use in practice:

• UK benefit: ISA continues to shelter UK tax on holdings.
  
• US cost: potential US reporting and different tax treatment depending on status/holdings.
  
• Platform risk: restrictions/closures even if HMRC rules are met.
  

Step 6: If transferring, do it properly

GOV.UK is clear that to transfer an ISA you should use the new provider’s transfer process (rather than withdrawing yourself and trying to re-subscribe later).

Again, whether a provider will accept a US-linked client is a separate question, but operationally, follow the ISA transfer process if you are moving it.

Common mistakes we see

1. Continuing ISA contributions after moving abroad
   This is one of the easiest problems to avoid. HMRC’s position is clear.
   
2. Assuming “tax-free in the UK” means “tax-free in the US”
   That assumption is where people get burned.
   
3. Panic-selling funds to “simplify” things
   If PFICs are a factor, the point of sale/switch can be exactly when complexity explodes.
   
4. Ignoring provider compliance requests
   If you don’t respond, platforms often restrict dealing first and explain later.

How Cameron James helps (US residents with UK ISAs)

US-connected clients don’t need generic reassurance. They need a setup that works in the real world, with platform policies, FATCA restrictions, and the PFIC regime all considered upfront.

When we help a US resident (or US tax resident) with a UK ISA, the focus is typically:

• ISA rules and provider constraints
  We confirm what HMRC rules allow, what your provider is actually willing to support, and what restrictions are being applied (sell-only, blocked funds, closure risk, etc.).
  
• ISA transfer support, done properly
  Where a move is sensible, we guide the transfer using the formal ISA transfer process (to avoid the avoidable errors that happen when people withdraw and try to re-subscribe later).
  
• SEC adviser support for US residents
  If you are a US resident / US person, we can support you through an SEC adviser route (via our US-facing advisory capability) so you’re not trying to solve a US-regulated problem with a UK-only approach.
  
• Investing without PFIC exposure
  We review what you currently hold and, where appropriate, structure the ISA holdings around investments that don’t fall under the PFIC regime (this is where many Stocks & Shares ISAs become toxic for US taxpayers).
  
• Wider cross-border planning (not just one wrapper)
  We look at the ISA in context: pensions, taxable accounts, currency exposure, reporting obligations, and your long-term plan, because the ISA is rarely the only moving part.