Can EU citizens open an ISA?

You work in the UK, and you often hear about a great way of growing your savings tax-free with the Individual Savings Account (ISA). But you are an EU citizen, and you wonder, with everything that happened with Brexit, are you eligible to start saving in an ISA?

The short answer is, yes, you can save in an ISA as an EU citizen if you reside in the UK.

Here are the key points to know:

THE ESSENCE

As an EU citizen, you can open an ISA if you reside in the UK

Being a resident means that you spend more than 183 days in the UK

If you reside in the UK, you can add £20,000 per tax year to your ISA account, like the Brits

You cannot put money into your ISA if you move from the UK

But even if you moved, you can keep your ISA, and still get the UK tax relief on the money held in it

If you return to reside in the UK, you can continue to contribute to your ISA

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Now let's dive into the details of ISAs for EU citizens!

Table of contents

Intro
Am I a UK resident?
What happens if I move back to the EU?
Should I open an ISA as an EU citizen?

Am I a UK resident?

Whether you qualify as a UK resident depends on how many days you spend in the UK in the tax year (6 April to 5 April the following year).

You may be resident in the UK, if:

You spent 183 or more days in the UK in the tax year
Your only home was in the UK for 91 days or more in a row, and you visited or stayed in it for at least 30 days of the tax year
You worked full-time in the UK for any period of 365 days and at least one day of that period was in the tax year you’re checking
You spend a number of days in the UK and have additional work or family in the UK

You will not be treated as a UK resident, if:

You spent fewer than 16 days in the UK (or 46 days if you have not been a UK resident for the 3 previous tax years)
You worked abroad full-time (at least 35 hours a week), and spent fewer than 91 days in the UK, of which no more than 30 were spent working

The UK government has a website where you can check if you qualify.

If you are an EU citizen, and also a spouse or a civil partner to a so-called Crown servant – for example a UK diplomat –, you could also qualify for an ISA.

What happens if I move back to the EU?

If you open an ISA in the UK and move back to your EU country, you cannot put money into your ISA account after the tax year (from April 6 to April 5) that you moved in. You also must tell your ISA provider when you stop being a UK resident.

But the good news is, you can keep your ISA open and you will still get UK tax relief on money and investments held in your ISA account.

It is important to check the local tax rules in the EU country that you move back to as depending on the regulation, they might want to tax the investments you hold in your ISA account in the UK. Different countries have different rules in that respect.

You can transfer an ISA to another provider even if you are not a UK resident anymore.

You can also withdraw money held in your ISA account even if you live abroad on the same terms as if you lived in the UK. But since you cannot contribute to your account, it means there will be fewer and fewer investments held in it.

You can start paying the £20,000 annual allowance into your ISA again if you return and become a UK resident once again.

Should I open an ISA as an EU citizen?

Whether you should open an ISA or not as an EU citizen depends on your personal situation and financial goals.

ISAs are a great way to grow your savings and shield them from UK tax. But since there is a £20,000 limit to how much you can contribute to your different ISA accounts, they are more worthwhile as a long-term investment.

If you plan to live in the UK for an extended period of time, perhaps even settle there for good, it is a great way to build tax-free savings. But if you only plan to stay for a few years, there is a very tangible limit to how much you can put aside tax-free.

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Can EU citizens open an ISA?

Intro

Am I a UK resident?

What happens if I move back to the EU?

Should I open an ISA as an EU citizen?

Further reading