Before You Move to the US from the UK: What to Do with Your ISA, Pension, and NI Record

Your ISA is not tax-free in the US. Your SIPP may be a PFIC. And you have a window to top up your National Insurance record at the Class 2 rate that closes the moment you're no longer eligible.

James had a Stocks and Shares ISA worth £80,000. He'd been growing it for seven years. He moved to San Francisco on an L-1B and assumed the ISA tax wrapper followed him. His US CPA reviewed his foreign asset disclosure and was direct: the ISA wrapper is not recognized by the IRS. The gains that had accrued inside the ISA — tax-free in the UK — are US-taxable as ordinary income. Not capital gains. Ordinary income.

He'd been building a tax-free account in a country he'd left. The US doesn't recognize the container.

6 Months Before Departure

ISA decision: freeze, close, or accept US tax treatment

Once you become a US resident alien, your ISA is a foreign financial account. Any gains that accrue inside it after you become a US resident are US-taxable. The UK continues to treat it as tax-free — but that's a UK decision with no binding effect on the IRS.

You have three choices. Freeze it: stop contributing, leave the balance, accept that future gains are US-taxable but don't complicate things further. Close it: cash out before departing, pay any UK tax due (usually none given ISA treatment), start fresh in the US. Hold and accept: keep it, report the gains annually on your US return, and understand that the tax-free growth you expected from the ISA wrapper doesn't apply in your new country.

You cannot contribute to an ISA after you become a UK non-resident. UK rules prohibit non-residents from making new ISA contributions. So "freeze" effectively happens automatically — the only question is whether to close the existing balance or leave it.

SIPP and pension review: the PFIC question

A UK workplace pension or SIPP may have PFIC characteristics depending on how the underlying funds are structured. If your pension invests in UK-domiciled funds (which most do), those funds may be PFICs from a US perspective.

The US-UK tax treaty (Article 17) does provide some protection for UK pension plans. The treaty allows the UK pension to be treated as a pension for US purposes, meaning the US defers tax on growth inside the pension until distributions. The treaty protection is not automatic — it requires claiming the treaty position on your US tax return annually (Form 8833 treaty disclosure).

Get specific advice on your SIPP before you leave. The treaty position generally protects you from annual PFIC reporting on the underlying funds, but "generally" is doing work. The structure of your specific pension plan matters.

National Insurance voluntary contributions window

This is the most time-sensitive item on this list and the one most people miss.

UK National Insurance contributions determine your entitlement to the UK State Pension and certain UK benefits. You need 35 qualifying years for a full UK State Pension. If you've worked in the UK for 7 years and you're leaving, you have gaps. You can fill those gaps voluntarily.

For people working abroad, Class 2 voluntary NI contributions are significantly cheaper than Class 3 contributions available to people not working. The Class 2 rate for 2025-26 is £3.45 per week — approximately £179 per year — versus £17.45 per week for Class 3. The Class 2 rate is only available while you're working abroad in an otherwise "employed or self-employed" capacity. If you stop working, you become Class 3.

Apply via form CF83 from HMRC while you're still abroad and working. This is worth doing even if your UK State Pension feels distant — the cost per year of UK State Pension entitlement at the Class 2 rate is remarkably low relative to the eventual benefit.

30 Days Before Departure

Document all UK account balances

Every UK bank account, ISA, SIPP, and investment account with a balance exceeding $10,000 in aggregate (converting at the prevailing rate) is FBAR-reportable once you're a US resident. Document balances at the date of departure to establish your baseline for the first FBAR filing.

UK property held in your name while you're a US resident: if it generates rental income that passes through a UK bank account, that account is FBAR-reportable. The property itself is not a financial account, but the account receiving rental income is.

Equity compensation: get employer reference for pension portability questions

If you have unvested equity from a UK employer, the US tax treatment on vest depends on your employment structure after departure. If you remain on UK payroll during transition, UK PAYE applies. If you transfer to US payroll, US withholding applies. Get clarity on the payroll structure before you go.

First 90 Days in the US

FBAR filing awareness

Your UK accounts — ISA, SIPP, bank accounts — are all reportable on FBAR if aggregate balances exceed $10,000. File FinCEN 114 by April 15 (October 15 with extension) for any calendar year in which you held qualifying accounts. The SIPP is a foreign financial account even if the treaty protects its tax treatment — it's still an FBAR disclosure.

Treaty position on pension distributions

The US-UK treaty Article 17 covers pension distributions. UK pension distributions (from SIPP or defined benefit pension) paid to US residents are taxable in the US. The UK may also withhold, depending on the pension structure. The treaty allows for a reduced withholding rate on pension income. Your US CPA needs to claim the treaty position annually on your return to ensure the correct treatment.

Ongoing Obligations

FBAR (FinCEN 114): Annual, for all UK financial accounts exceeding the $10,000 aggregate threshold.

Form 8833: Annual treaty disclosure if you're claiming treaty positions on pension income or other UK-source income. This is the formal mechanism for claiming the UK pension treaty protection.

ISA gains: Report gains from ISA holdings annually on Schedule D. The UK tax-free status is irrelevant to the US filing.

NI contributions: If you set up CF83 voluntary contributions, these continue as long as you're working abroad. Review annually that the Class 2 status still applies given your employment situation.

UK State Pension at retirement: UK State Pension is taxable income in the US. The US-UK treaty doesn't exempt it. Report it as foreign pension income on your 1040. The treaty provides mechanisms to avoid double taxation if the UK also withholds.