23rd February 2015
Born in the USA? Pay US Taxes For Life
Boris Johnson has recently renounced his US citizenship. It has been suggested that he did this to clear his way to becoming the UK Prime Minister.
However, it is more likely that he was horrified by the US tax system. Boris was born in the US but has not lived there since the age of 5. If he had been born in almost any other country in the world (apart from Eritrea!) his primary concern would have been with UK tax and he might never have had to pay any tax to the country of his birth. The US, however, has a rare system: if you are a US citizen you are liable on your worldwide income for the rest of your life.
This was brought home to Boris relatively recently when he received a tax bill from the Revenue in the US in connection with the sale of his house in London. Unfair? Probably. Enforceable? Yes!
Once bitten, twice shy. Boris has now successfully renounced his US citizenship. Provided that he doesn’t return there (or buy assets there) he is now free of the US tax system. It will have been a long process for him to renounce citizenship. Having left it to this late stage in his life (and accumulation of wealth) he may also have had to pay an exit tax charge to the US.
The moral? Well, unless you truly value easy access to America, or feel you might want to wave your passport in the air and demand to be protected by their gunships, its time to seek advice, do the calculations and decide whether you can afford the privilege of being a citizen of America.
If you would like assistance on this, or any other personal or trusts tax issue, please contact the Head of our Trust and Tax Team, Eric Wardle on 01604 463110 or click here to email Eric.
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