ISA Rules: What Happens If You Move to the US?

So you're planning a move to the US and suddenly your ISA feels like a puzzle. Don’t worry—you’re not alone. Thousands of Brits face this every year, and most wish they’d known how the rules change before packing their bags.

The tough truth? You can’t just use your ISA like nothing’s changed. The UK says you can hang onto your existing account, but you won’t be able to put in new money once you become a US resident. And if you think the US will politely ignore your ISA, think again—they treat those tax-free savings a whole lot differently.

If you’re not careful, you could end up with a tax bill or see your investment choices suddenly get restricted. But hey, there are ways to avoid the worst headaches. Knowing the rules up front is the first step. Let’s get real about what happens and how you can still make the most of your money, even when you’re living stateside.

• The Basics: Can I Keep My ISA?
• What Happens to Existing ISAs?
• US Tax Complications
• Can I Keep Adding Money?
• Your ISA If You Return to the UK
• Tips and Mistakes to Avoid

The Basics: Can I Keep My ISA?

If you’ve built up some money in a UK ISA, it’s natural to wonder if it sticks around when you move to the United States. The answer is yes, you can ISA account after leaving the UK— but with a few big catches.

The main thing to know: once you officially become a non-UK resident, you’re not allowed to put in any new money to your existing ISA. No more top-ups. You can, though, keep your money sitting there and let it grow. Your provider won’t close your account just because you’ve changed address, and you don’t have to pay back any of the tax-free profits you already made.

People often ask how strict this rule is. It’s really black and white. HMRC’s guidance says if you move abroad, your ISA turns into a "read-only" account. You can take money out but not add fresh cash. It doesn’t matter if you split your time between countries or still pay UK tax— this rule sticks once your main home is outside the UK.

Check out this simple comparison:

There are a couple of exceptions. If your move is temporary—say, for a university course or a short-term job—there’s a little wiggle room. But for most people intending to settle or work long-term in the US, ISAs are locked for new contributions.

Before you move, think about filling up your allowance for the tax year you’re still a UK resident. Some people forget this and miss out—once you’re officially based in the US, that year’s ISA allowance is gone for good.

And one more tip: Always tell your ISA provider when you change your address. They’ll update their records, and you’ll avoid any headaches down the road.

What Happens to Existing ISAs?

Your ISA doesn't disappear when you hop on a plane to the US. You get to keep any ISAs you opened before your move—whether they're cash, stocks and shares, or Lifetime ISAs. You can leave your money sitting there, and it'll keep growing without the UK taxman taking a cut. That means your interest, dividends, or gains built up after you move are still UK tax-free.

But there are some catches. Once you officially become a US resident, UK rules slam the door on new ISA contributions until you move back. Sometimes, your ISA provider might even freeze your account for extra safety checks or restrict switches between funds. It's smart to tell your ISA provider as soon as you know your US moving date, so they can give you any forms or info you need, and you won’t get stuck later on.

Here’s where it gets trickier. Even though the UK calls your ISA tax-free, the US doesn’t see it that way. To the IRS, your UK ISA looks like any other foreign investment account. They won’t give you any special treatment—and that means any income, interest, or growth in your ISA could be taxed by the US every year. The type of ISA really matters here. Stocks and shares ISAs get hit hardest because the IRS might treat the funds inside as PFICs (Passive Foreign Investment Companies), which can mean lots of paperwork and, sometimes, high tax rates.

Worried about what exactly gets taxed? Here’s a simple rundown:

• Cash ISAs: Interest is usually taxable in the US.
• Stocks & Shares ISAs: Both dividends and investment gains can be taxable, with extra reporting hurdles if you own UK funds or ETFs.
• Lifetime ISAs: Treated just like regular stocks and shares by the IRS, so no tax break.

This table gives a quick heads-up on what happens after your move:

Bottom line: Your UK ISA is safe from the UK taxman, but you’ll have to deal with the IRS calling dibs on anything you earn while you’re in the States. Before you move, talk to your provider and think about switching out of UK funds if you have investments inside your ISA. This helps cut US tax hassle and sets you up for fewer headaches when tax time rolls around.

US Tax Complications

Here’s where things usually get messy. In the UK, ISAs are sheltered from tax, but once you’re a US resident, that tax-free dream ends. The IRS doesn't see your ISA as anything special. In fact, they treat it like a regular overseas investment account, and that can bring a bunch of reporting headaches and even extra tax every year.

Let’s get specific. Any interest, dividends, or gains in your ISA must be reported to the IRS. You’ll need to include these on your annual US tax return, just like any US-based account. Forgetting could cause penalty trouble down the line. Stocks and funds inside the ISA can be an even bigger pain, especially if your ISA holds UK mutual funds or ETFs, because the US calls these “PFICs” (Passive Foreign Investment Companies). PFICs are taxed unfavorably—think higher rates and a ton of paperwork (Form 8621, if you love forms).

Here’s a quick snapshot to help you compare how ISAs get taxed:

Don’t forget about all the extra reporting hoops, either. If your ISAs (and any other non-US accounts) total over $10,000 at any point in the year, you’ll have to submit FBAR (Foreign Bank Account Report). If your accounts are over $200,000 and you’re living abroad, FATCA (Form 8938) comes into play too. These forms aren’t optional—the IRS takes foreign account reporting pretty seriously.

• Report all ISA earnings on your US tax return each year.
• Watch out for PFIC rules—mutual funds and ETFs inside your ISA might get taxed at the highest rate, along with nasty paperwork.
• File FBAR if the total across all your non-US accounts crosses $10,000, even just for a day.
• File Form 8938 (FATCA) if you meet the higher reporting threshold.

So, while your ISA keeps its UK tax perks, the US pretty much ignores them. When you move, remember—your ISA can become a taxable headache stateside. It’s worth checking in with a cross-border tax expert who understands both UK and US rules, so you don’t accidentally pay more than you need to or miss a reporting deadline.

Can I Keep Adding Money?

This is the first question everyone asks. The short answer? No, you can’t keep adding cash to your ISA once you become a US resident for tax purposes. As soon as you leave the UK and start paying US tax, HMRC rules say you’re not allowed to put more money into your existing ISA or open a new one. Your ISA account won’t be closed, but it’s basically frozen—just left to grow (or shrink) on its own.

To make this absolutely clear, here’s how it breaks down:

• ISA contributions stop the moment you become a US resident, even if you’ve still got part of your UK allowance left for that tax year.
• Your provider should know about your move, so don’t try to sneak in extra payments. If you keep putting money in, that might get flagged down the road and cause all sorts of issues.
• Already paid-in money stays protected in the ISA 'wrapper,' so you don’t lose the UK tax benefits on what you built up before moving.

There’s a big difference between saving in the UK and the US. In the UK, you get that nice tax-free perk inside an ISA. Over in the US, the IRS doesn’t give ISAs any special treatment. Money you leave inside keeps growing tax-free from the UK’s point of view, but the US will see gains and income as taxable just like regular investments. That’s a tough break for expats used to easy ISA rules.

If you’re planning the move midway through a tax year, you can still use the allowance up until the day you qualify as a US resident. After that, you’re locked out from topping up any further. Tell your ISA provider when you leave—most will freeze your contribution rights right away once you update your address.

If you ignore this and keep adding money, you can lose your tax perks or even face penalties. It’s never worth sneaking extra in. Instead, look at US-friendly accounts for future savings, or chat with a financial adviser who knows the expat rules for both countries.

Your ISA If You Return to the UK

Thinking about heading back to the UK after living in the US? Good news: your ISA doesn’t just disappear while you’re away. But there are a few details to be super clear on if you want to keep things smooth when you return.

First up, your old ISA sticks around while you’re overseas, but you can’t add new money to it during your time as a US resident. The day you become a UK resident again, though, you’re back in the game. You can start paying into your existing ISA or even open a totally new one—just as if you’d never left. That’s true whether we’re talking about Cash ISAs, Stocks & Shares, or even a Lifetime ISA (as long as you meet the age rules for each).

Since UK tax rules kick back in, your ISA starts growing free from UK tax the way it used to. But if you racked up any taxable gains or interest while you were in the US, Uncle Sam might still come knocking for their share, depending on what you did with your investments while away. Always report anything that happened while you were a US resident to stay out of trouble.

• You don’t need to open a new ISA unless you want to. Your old account is just waiting for a top-up.
• You’ll regain your full ISA allowance (for 2025/26 it’s £20,000).
• If you missed out on using your allowance in previous years while abroad, sorry—those years are gone. You can only use the allowance for the year you return onward.
• Tell your ISA provider as soon as you move back. They’ll usually ask for proof of address in the UK to reactivate deposits. No proof, no deposits.
• If you plan to move again in the near future, weigh up how long you’ll be UK resident for when deciding on a new ISA.

Here’s a quick look at how the rules snap back into place after you return:

Keep this in mind if you’re weighing whether to cash out, leave your ISA untouched, or just jump straight back into saving once you’re settled. Keeping your ISA alive during your US stint makes it easy to pick up where you left off. Just don’t forget to update your bank and the tax man when you return—no one wants admin headaches.

Tips and Mistakes to Avoid

If you’re moving to the US, it’s easy to get tripped up by the ISA rules and tax changes. People often rush the process or assume that the US taxman just ignores UK accounts. That can turn into a pretty expensive lesson.

Here are key pointers that actually save people money and stress:

• ISA income isn’t tax-free in the US. The IRS doesn’t recognise UK ISAs as tax-exempt, which means interest, dividends, and gains must show up on your US tax return. Folks often forget this, but it’s a big one.
• Don’t keep stuffing cash into your ISA after you move. Once your official UK residency ends, you aren’t allowed to add money, no matter what a fast-talking bank tells you.
• Some ISA investments can create new US tax headaches. Things like UK mutual funds (often called OEICs or unit trusts) can be classified as "PFICs" in the US. Owning a PFIC means extra forms, big fees, and sometimes scary tax rates.
• Inform your ISA provider about your move. Some banks will freeze online access, request a US address, or even close your account if you don’t update them. Don’t ignore those annoying emails asking for a status update.
• Consider whether to cash out, transfer, or leave the ISA frozen. Depending on your future plans, the right answer will be different. Cashing out means you lose UK ISA benefits forever, but in some cases, it saves hassle on US taxes.

A lot of folks don’t know just how much paperwork or cost a "simple" ISA can add. Here’s how the IRS views different ISA types for Americans:

Ignore the rules, and you’ll get a shock at tax time. But if you plan ahead, tell your UK bank, and talk to a cross-border tax adviser, you can dodge big headaches. Don’t forget—US tax forms want all the details, so keep clear records starting Day 1 in America. Miss a form and you could face a penalty even if you owe nothing.

Big takeaway: if you want to keep life simple in the US, check what’s in your ISA, get the tax advice, and don’t just let things drift. It’s worth it for peace of mind—and maybe a fatter wallet in the long run.