London & Capital has created a discretionary fund management service for advisers with US clients as it believes the impact of US tax gathering should not be underestimated.
The firm says there are around 200,000 registered Americans in the UK, with some being advised by IFAs who mistakenly believed US clients fall under UK tax rules. This has left Americans who invest in funds through UK wrappers such as Isas, offshore bonds and Sipps vulnerable to hefty fines imposed by the US authorities.
London & Capital says the US is ramping up its tax-collecting regime and many UK financial institutions, including some IFAs, are now refusing to deal with Americans.
It says advisers may worry about potential liabilities relating to the investment advice given to US clients. Situations where a British person has married an American and holds investments in joint names for IHT efficiency could also lead to US tax issues.
London & Capital’s service provides different portfolios for US clients based on how long they have lived in the UK, which is necessary to ensure the portfolios are tax-compliant from a UK and US perspective.
Clients who have lived in the UK for up to seven out of the last nine years have three risk-graded exchange-traded fund portfolios to choose from, catering for conservative, balanced and growth risk profiles.
Those living in the UK for more than seven out of the last nine years have two options, a sterling or a dollar-denominated balanced portfolio comprising 55 per cent equities, 35 per cent bonds and 10 per cent commodities.
London & Capital joint managing director and head of US family office Daniel Freedman says: “For IFAs with US clients, this is becoming more topical and it needs to be carefully thought through. We chose the Praemium platform because it was the only platform that can deal with US clients and multi-asset portfolios.”