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United Kingdom specific
Kirsten Simmons avatar
Written by Kirsten Simmons
Updated over a week ago

TFX specializes in top-tier U.S. tax services for individuals, partnerships, corporations, trusts, and estates worldwide. If you need assistance with your U.K. tax return, we have got you covered. We maintain strong partnerships with trusted local tax experts in 193 countries. These professionals are well-equipped to handle your non-U.S. tax needs. Reach out to us via phone, chat, or email, and we will connect you with an experienced local firm. Your global tax compliance just got simpler with TFX.

Table of contents:

U.K. tax glossary

  • Benefits in kind are non-cash benefits, such as company cars, given to employees. They used to be called fringe benefits. Most benefits in kind are taxable. There are different rules if an employee earns less than a certain amount each year.

  • Building society - Similar to a bank but owned by members of the building society rather than shareholders in a company (the close equivalent to a U.S. credit union).

  • Cash ISA - A savings account with interest earnings deferred in the U.K. but taxable as a regular savings account in the U.S.

  • Council tax applied to residential properties in England, Wales, and Scotland.

  • Income tax allowances - Everyone who lives typically in the U.K. is entitled to receive a certain amount of income each year before they have to start paying taxes. This amount is called the personal allowance. Other additional allowances can reduce the tax you have to pay. The amounts of the allowances are usually announced each year.

  • Her Majesty's Revenue and Customs (HMRC) is the government department responsible for assessing and collecting most types of tax, including VAT. HMRC is also responsible for paying tax credits and child benefits.

  • Pay As You Earn (PAYE) is the U.K. system for collecting the tax and National Insurance contributions from the wages and salaries of employees and the tax from some pensions. The employer or pension provider deducts the tax at source from the employee's wages or pension and sends it to H.M. Revenue and Customs.

  • Self-Invested Personal Pension (SIPP) is a type of U.K. government-approved personal pension scheme that allows individuals to make their own investment decisions.

  • Self Assessment tax return - If you are a U.K. taxpayer, you are responsible for informing HMRC about any income or gains that may be taxable. Some taxpayers must complete a yearly form called a Self Assessment tax return, telling HMRC about income and capital gains in that year. HMRC uses the tax return figures to determine how much tax is payable. Self Assessment also allows you to claim tax allowances or reliefs against your tax bill and HMRC to collect specific National Insurance contributions and student loan repayments. There are strict deadlines for tax returns and making payments under Self Assessment.

  • Stamp Duty Land Tax is a tax you pay on a land transaction in England, Wales, or Northern Ireland, for example, buying a house or being granted a lease on a property. For more information about Stamp Duty Land Tax, go to the H.M. Revenue and Customs website, and for more information about Stamp Duty Land Tax in Northern Ireland, go to the N.I. Direct website.

  • Stocks and Shares ISAs are investment accounts with the preferential U.K. tax treatment of dividends and Capital Gains.

  • The tax year starts on April 6th in one year and ends on April 5th of the following calendar year.

  • Value Added Tax (VAT) is a tax on goods and services. It is payable at a certain percentage, which the government announces in each year's budget. It is administered and collected by H.M. Revenue and Customs.

  • Unit Trust - Pooled Investment is constituted under a trust deed. Similar to U.S. mutual funds but as opposed to U.S. mutual funds, U.K. unit trust is subject to the PFIC regime.


U.K. tax system

Who is considered a U.K. resident?

In the United Kingdom, you are defined as a resident by the rules set out by the Her Majesty's Revenue and Customs (HMRC). In short, your residency is determined by your long-term intentions and the number of days you spend in the country. This exercise counts each day if you are in the U.K. at midnight.

  • If you are in the U.K. and do not intend to stay for more than two years, you are a resident for the tax year if 183 or more days are spent in the U.K. If you spend less than 183 days in the U.K., you will not be considered a resident for tax purposes.

  • If you have spent 91 days or more on average per year in the U.K. over the last four tax years, you will be considered a resident for tax purposes. You would be considered a resident for tax purposes from your arrival if you intended to spend more than 91 days per year in the U.K.

  • If you come to the U.K. and expect to stay for two years or more, you are considered a tax resident from the first day you arrive.

There are also two types of residents for a tax year: Ordinarily and not ordinarily.

  • Resident and ordinarily resident: When you live in the U.K. and expect to stay for three years or more. This can be proven by purchasing or leasing property available for three years or more.

  • Resident but not ordinarily resident: When you normally live outside the U.K. but are in this country for 183 days or more in the year.

  • Ordinarily resident but not resident: When you normally live in the U.K. but have gone abroad for a long holiday and have not set foot in the U.K. during the year.


What is a domicile?

For U.K. tax purposes, domicile is important for determining how you are taxed on your worldwide income. Domicile is defined as where a person has a long-term, permanent home. It is different from citizenship or residence.

Your domicile or origin is the same domicile as your father's domicile at the time of birth. If your father had changed domicile while you were still a dependent, your domicile would also have changed. You can, however, adjust your domicile. To do so, you must cut links with your previous domicile, move to a new jurisdiction, and have a permanent home in that jurisdiction. It is challenging to acquire the domicile of choice compared to the domicile of origin, and the responsibility to prove that your domicile has changed lies on you.

Most expats in the U.K. are considered non-U.K. domiciled.


Is foreign income taxed in the U.K.?

The tax paid on worldwide income will depend on your residency and domicile status in the U.K. If you are considered a resident of the U.K., you are taxed on all of your investment income, no matter the location. This will be the same income reported on your U.S. expat taxes.

If you are a resident but not domiciled in the U.K., you can file using the remittance basis for foreign income and capital gains. If you are a domiciled resident but are not ordinarily resident, you can use remittance only for your foreign income, not capital gains. Remittance basis allows you to elect to be liable to pay U.K. tax on investment income remitted in the U.K. Income must be remitted if brought to the U.K. or paid to you in the U.K. Contacting a tax advisor regarding overseas bank accounts is good to avoid costly mistakes for non-UK domiciled residents.


What is the U.K. income tax rate?

For the 2023-2024 tax year, the national income rates from HMRC are as follows:

Band

Taxable income in GBP (£)

Tax rate

Personal Allowance

0 to £12,570

0%

Basic rate

£12,571 to £50,270

20%

Higher rate

£50,271 to £125,140

40%

Additional rate

over £125,140

45%

Note: Personal Allowance can be used to earn interest tax-free if you have not used it up on your wages, pension, or other income. You can also see the rates and bands without the Personal Allowance. You do not get a Personal Allowance on taxable income over £125,140. For more information, refer to How much U.K. tax you pay (2023).


What is the U.K. tax year?

The U.K. tax year differs from that of the U.S. It spans from April 6 to April 5.


When is the U.K. tax due date?

Paper tax returns must be submitted to HMRC by October 31 of the tax year. This deadline contrasts with the April deadline for U.S. expat taxes.

E-filed tax returns must be submitted by January 31 following the tax year. HMRC does not grant extensions.

Regarding payments, the U.K. operates on a withholding system (PAYE) through your employer's payroll. For non-wage income without withholding, payments are due on January 31 of the tax year, with completion required by July 31 following the tax year.


How do you account for the different tax years between the U.S. & U.K.?

We use prorated earnings and taxes paid from two consecutive years, encompassing the entire calendar year.

For example, to calculate figures for the 2023 U.S. tax year, we take three months from the U.K. 2022-2023 tax year and nine months from the U.K. 2023-2024 tax year. To do this, we would typically use your paystubs or run the calculation for obtaining these numbers.


What U.K. tax forms can I expect to receive?

There are three Pay As You Earn (PAYE) tax forms: P45, P60, and P11D:

  • P45 - You receive a P45 from your employer when you stop working for them. It shows how much tax you have paid on your salary so far in the tax year (April 6 to April 5).

  • P60 - Your P60 shows the tax you have paid on your salary in the entire tax year (April 6 to April 5). If you are employed on April 5, your employer must provide it by May 31, either on paper or electronically.

  • P11D - Your employer will send a P11D to HMRC if you receive any benefits in kind, such as company cars or interest-free loans. It records the value of each benefit.

Please provide us with every PAYE form you receive; we request this on the Wages tab of the Tax Questionnaire.


Do I have to complete a U.K. tax return?

Most U.K. taxpayers are taxed at source, meaning tax is deducted before they receive income, like wages under the PAYE system or U.K. bank interest. They typically do not need to complete a Self Assessment tax return.

However, individuals with income not taxed at source or not taxed at the correct rate and on which tax is due are required to inform H.M. Revenue & Customs about the income within six months of the tax year's end in which the payment is received (that is by October 5th following the end of the tax year). Such income includes rental income, self-employment income, savings income for higher rate taxpayers, and occasional untaxed income like eBay sales or freelance earnings. HMRC will send you a notice to file a tax return, either by post or electronically. If HMRC sends you a notice to file a return, even if you are an employee with all income taxed under PAYE, you must complete and submit the return to HMRC.


What other taxes aside from income tax should I be aware of?

In addition to income tax on salaries paid, other forms of income are taxed in the U.K.

Non-cash compensation is considered taxable. This includes housing stipends, relocation expenses, meal and clothing allowances, commuting costs, club memberships, education reimbursement, or home leave payments. There are exceptions, but in general, expats can expect to pay taxes on non-cash compensation in the U.K., including the National Insurance.

Any capital gains will also be taxed, including the sale of your only or primary residence, life insurance policies, corporate bonds, motor cars, gifts of assets to charity, gains from ISA accounts, and U.K. government bonds. If you are a resident or ordinarily resident and domiciled in the U.K., this includes worldwide capital gains. If you are not domiciled, it will only be on capital gains earned in the U.K., allowing for election by the remittance basis for overseas gains.

For estate taxes, you can expect to pay inheritance tax to worldwide assets if you are domiciled in the U.K. HMRC deems you responsible for inheritance taxes if you have been resident in the U.K. for 17 or more of the last 20 years. If you are domiciled in the U.S., you are only responsible for inheritance on assets inside the U.K.


What is the name of the U.K. Tax Declaration document, and who must have it prepared? Do you need a copy?

U.K. Tax Declaration is called Self Assessment tax return. You must send it to HMRC if, in the last tax year, any of the following applied:

  • you were self-employed as a sole trader and earned more than £1,000 (before taking off anything you can claim tax relief on) - you can deduct allowable expenses.

  • you had a total taxable income of more than £100,000.

  • you got £2,500 or more in untaxed income, e.g., from renting out a property or savings and investments - contact the helpline if it was less than £2,500.

  • your savings or investment income was £10,000 or more before the tax.

  • you made profits from selling things like shares, a second home, or other chargeable assets and need to pay Capital Gains Tax.

  • you were a company director - unless it was for a non-profit organization (e.g., a charity) and you didn't get any pay or benefits, like a company car.

  • your income (or your partner's) was over £50,000, and one of you claimed Child Benefit.

  • you had income from outside the U.K. that you needed to pay tax on.

  • you got dividends from shares, and you are a higher or additional rate taxpayer; but if you don't need to send a return for any other reason, contact the helpline instead.

  • you were a trustee of a trust or registered pension scheme (e.g., Self-Employment Income Support Scheme (SEISS) grant).

  • HMRC sends you a notice to file a return even if you do not have any tax to pay.

You can easily check if you need to send a Self Assessment tax return online. You usually won't need to send a return if your only income is your wages or pension.

❗ Important note: if you submitted the Self Assessment form for the period covered by the U.S. tax year (either January 1 - April 5 or April 6 - December 31), please provide it (or both of them) to your tax preparer at TFX. We ask for it in the Tax Questionnaire section Personal Details > The Basics > Logistics and the question Do you have an annual tax return from any non-U.S. country?


U.K. businesses and investments

Opening a local business in the U.K. as a U.S. citizen

Before opening a local business in the U.K., you must first possess the right to reside and work in the U.K. legally. Moreover, you must decide on your business structure and register your business with the appropriate U.K. agency. There are several U.K. agencies where you may need to register your business, such as the Companies House and Her Majesty's Revenue and Customs (HMRC).


Types of local business structures in the U.K. and the U.S. filing requirement

  • Sole Trader (Sole Proprietorship)

    As a Sole Trader, you are self-employed and responsible for your business's debts. You must report your self-employment to the IRS via form Schedule C (included in our PREMIUM package).

  • Limited Company

    A limited liability company means the business is considered a separate entity from the individuals who form it. You must report your Limited Liability Company to the IRS via Form 5471.

  • Partnerships

    U.K. Partnership limited liability partnership (LLP) is treated as a corporation (filed via Form 5471). General partnership (L.P.) is treated as a partnership - Form 8865.


Treatment of U.K. ISA, ISA with stocks (e.g., OEICs), and SIPP on U.S. tax returns

  • Individual Savings Account (ISA): ISAs are not considered foreign trusts. Income earned in ISAs cannot be deferred for tax purposes in the United States. While you must report ISA income on Form 1040, you are not required to report ISAs as foreign trusts.

  • ISA account with stocks: If your U.K. ISA contains stocks, including OEICs (Open-Ended Investment Companies), investment trusts, and individual shares, you may have reporting requirements related to PFICs (Passive Foreign Investment Companies) as OEICs are collective investment schemes that are treated in the U.S. as PFICs.

  • Self-Invested Personal Pension (SIPP): Due to the U.K.-U.S. tax treaty, SIPPs are recognized as IRS-qualified pension accounts, whether it is employer-sponsored or individual plans. This means there is no need to report them as foreign grantor trusts on your U.S. tax return. Income within SIPPs can be deferred, similar to income within U.S. IRA accounts. Interest in SIPP does not need to be reported on your U.S. tax return.

    Note: some tax preparers, particularly in the U.K., may suggest filing redundant forms or unnecessary disclosures (Form 3520-a and Form 8833) for U.S. tax returns related to SIPPs. However, the U.S.-U.K. tax treaty already covers the tax treatment of SIPPs, making such additional filings unnecessary.


Social Security and pensions

Contributions to the U.K. National Insurance system withheld from your paycheck or made on self-employment income are not deductible from the U.S. taxable income and do not qualify for the foreign earned income credit. You can check your National Insurance record online.


U.S. - U.K. Social Security Totalization Agreement

An agreement between the United States and the United Kingdom improves Social Security protection for people who work or have worked in both countries. It helps people who, without the agreement, would not be eligible for retirement, disability, or survivor benefits under the Social Security system of one or both countries. It also helps many people who would otherwise have to pay Social Security taxes to both countries on the same earnings.

The agreement's provisions eliminate double Social Security taxation and permit dual residents to use their work in both countries to qualify for benefits.

  • If you are self-employed, contributions to the National Insurance System exempt you from contributions to the U.S. Social Security system that otherwise would be required in the U.S. on self-employment income.

  • If you have Social Security credits in both the United States and the United Kingdom, you may be eligible for benefits from one or both countries. If you meet all the basic requirements under one country's system, you will get a regular benefit from that country. If you do not have enough work credits under the U.S. system to qualify for standard benefits, you may be able to qualify for a partial benefit from the United States based on both U.S. and U.K. credits. To be eligible to have your U.K. credits counted, you must have earned at least six credits under the U.S. system.

    Note: although the agreement allows the Social Security Administration to qualify for U.S. retirement, disability, or survivor benefits, the agreement doesn’t cover Medicare benefits.


Taxation of Social Security benefits

  • U.S. Social Security benefits received by U.S. citizens and Green Card holders residing in the U.K. are exempt from tax in the United States and are taxable only in the U.K.

  • U.K. State Pension and other similar payments received under the National Insurance legislation by U.S. citizens and Green Card holders residing in the U.K. are taxable in both countries. However, you can eliminate the burden of double taxation. Taxes paid in the U.K. on pension income are applied as a foreign tax credit against tax owed on the same income in the U.S.

  • Contributions to U.K. employer pension schemes established in the U.K.:

    • Contributions paid by or on behalf of a U.S. citizen/Green Card holder to the pension scheme may be excludable in computing his U.S. taxable income, and

    • Any benefits accrued under the pension scheme or contributions made to the pension scheme by or on behalf of the individual's employer are not treated as part of the employee's taxable income.

    Note: the exclusion of contributions to the pension scheme is not mandatory. You may report those contributions on Income > Wages, the question Did your employer contribute to your pension plan? to have it added to your annual taxable income. Considering the high tax rate paid in the U.K. on earned income, added employer contributions may still leave you tax-free in the U.S. Your benefit: the added amount will be considered previously taxed - which will reduce the taxable portion of pension payments in the future.


Tie-Breaker Rule to Apply for Treaty Benefits

U.S. Green Card holders residing in the U.K. may elect to apply what is known as the tie-breaker rule of the U.S.-U.K. tax treaty and be deemed a resident only of the State (i.e., country) with which their personal and economic relations are closer (U.K.).

Under such an election, the individual would file Form 1040NR and report only income derived from U.S. sources. The requirement to provide full disclosure of foreign bank accounts remains, and the tax on income from U.S. sources will be higher than the tax on the same income when applied to U.S. residents filing Form 1040.


U.K. income reporting

Salary or wages

You will need four pay stubs for the year. All of them are for the calendar year you are filing U.S. tax returns (Jan-Feb-Mar and Dec). Add the amounts printed online to Total Payment for January, February, and March. Then add the amount from line Taxable Pay YTD from the December paystub (because the U.K. tax year is Apr-Mar, the Gross to Date value on the December paystub will reflect your pay for Apr-Dec).

A more straightforward way is this: If your salary has not changed over the year, you can multiply one monthly Total Payment amount by 12. Enter the result in the Tax Questionnaire:

  1. Click the Configure Life & Income button on the left side.

  2. Click Yes next to I receive payments from an employer.

  3. Click Next Step and Submit.

  4. On Income > Wages click Yes to the question Did you receive payments during the tax year from a non-U.S. Employer?

  5. Enter the gross salary amount to the question Gross wages/salary earned with this employer during the tax year? Use the income calculator to convert to a calendar year.


Income from self-employment

It is a turnover of your unincorporated business. To report the gross income from self-employment or business income, navigate to Income > Self-employment and enter the amount under the question Gross Income from self-employment.

Each type of income is reported as the gross amount before any deductions allowed in the U.K., for example, before contributions to the National Insurance. 

To report contributions to the National Insurance while being self-employed in the Tax Questionnaire:

  1. Navigate to Income > Self-employment.

  2. Click Yes under the question Did you make contributions to a Social Security system in your country of residence during 2022?

  3. Navigate to Taxes And Deductions > Taxes Paid and click Yes under the question Did you pay any tax to any non-U.S. country on any of your income this year?

  4. Fill in the table.


Redundancy pay

If you received redundancy pay, add the gross amount as additional wages.


Income tax

Similarly to income, the tax must be reported separately for each type of income on which tax was paid. Add the amounts printed online Tax (Section Deductions of paystub) for January, February, and March. Then add the amount from line Tax Paid YTD from December paystubs. Enter the result in the Tax Questionnaire:

  1. Navigate to Taxes And Deductions > Taxes Paid, and click Yes under the question Did you pay any tax to any non-U.S. country on any of your income this year?

  2. Fill in the table.

If there was additional tax payment during the calendar year (i.e., HMRC issued a tax bill for tax underpaid in the prior year), add that amount to the tax withheld during the filing year.

The payor may withhold taxes on unearned income (i.e., bank-withheld income from dividends), or you may owe tax upon completing the tax assessment form. Report each type of tax paid during the filing year in the respective section, even if it applied to income received in prior years.

To calculate the taxes paid during the selected year, use the income calculator. Provide the figures in your resident country calendar (for individual months or the whole year), then copy the calculated amount earned during the tax year.


Property tax on a U.S. residence

To report property tax:

  1. Open your Tax Questionnaire and click the Configure Life & Income button on the left side.

  2. Click Yes next to I want to maximize deductions.

  3. Click Next Step and Submit.

  4. Navigate to Taxes And Deductions > Deductions and click Yes under the question Do you want to list various expenses that might improve your tax position?

  5. Click Yes under the question Did you own residential real estate during the tax year?

  6. Click Yes under the question Did you pay property taxes on the residence?

  7. Provide the amount and indicate the currency.


Council tax on a non-U.S. residence

Reporting council tax depends on whether you rent or own a flat.

  • If you are a renter, council tax is a part of your housing expenses:

    1. Navigate to Personal Details > Where I Live > Housing Arrangements.

    2. Select Rent under the question Did you rent or own your primary foreign (i.e. non-U.S.) residence during the tax year?

  • If you are an owner paying council tax between tenancy, report it as property tax:

    1. Navigate to Taxes And Deductions > Taxes Paid, and click Yes under the question Did you pay any tax to any non-U.S. country on any of your income this year?

    2. Fill in the table and select Other as the tax type and provide a comment "property tax".

❗ Important note: foreign property taxes are not deductible for tax years 2018 through 2025.


Deductions

We will take specific deductions allowed for U.K. residents by the U.S.-U.K. tax treaty, for example, we can deduct contributions made to the employer pension scheme. You will report contributions to the employer pension separately from the gross income. We will take this deduction if this improves your tax position (in some cases, you may benefit from not taking this deduction now).

Further, the Taxes And Deductions > Deductions section of the TQ offers you questions related to various additional deductions. Such deductions include mortgage interest, alimony payments, and investment advisor fees. Similarly to personal allowance in the U.K., the U.S. tax system also applies a concept of "Standard deduction": $12,950 per single person and $25,900 for the married couple for the 2022 tax year. For most U.K. residents filing a U.S. tax return standard deduction option is more tax efficient than "itemized deductions" - grossing up individual deductions.


Pension contributions

To report employer contributions and your contributions to the pension scheme:

  1. Open your Tax Questionnaire and navigate to Income > Wages.

  2. Click Yes under the question Did you receive payments during the tax year from a non-U.S. Employer?

  3. Click Yes under the question Were contributions made to a non-U.S. pension plan (whether yourself or by your employer)?

  4. Click Yes under the question Did your employer contribute to your pension plan?

  5. Provide the amount and indicate the currency.


Pension payouts

To report payouts from foreign pensions of all types: the National Insurance, employer pension, and Bereavement Allowance (previously Widow's Pension):

  1. Open your Tax Questionnaire and click the Configure Life & Income button on the left side.

  2. Click Yes next to I have retirement accounts or receive retirement income.

  3. Click Next Step and Submit.

  4. Navigate to Income > Passive Income > Pension.

  5. Click Yes under the question Did you receive Foreign (i.e., non-U.S.) retirement distributions?

  6. Fill in the table Country & Pension Type.


Stocks and shares ISAs: Distributions, interest, dividends

Stocks and shares ISAs are investment accounts with the preferential U.K. tax treatment of dividends and capital gains. Individual tax-deferred savings accounts (ISAs) do not qualify for income deferral in the U.S. Income earned on these accounts must be reported on U.S. tax returns. 

Report distributions from individual pension accounts as income from regular investments in the Tax Questionnaire:

  1. Open your Tax Questionnaire and click the Configure Life & Income button on the left side.

  2. Click Yes next to I have investments.

  3. Click Next Step and Submit.

  4. Navigate to Income > Investments and click Yes under the question Did you sell any type of securities during 2022?

  5. Click Yes under the question Do you have investments in non-U.S. pooled investment funds? and upload annual statements for the last 3 years in which the fund was held (showing year-end balance).

Report interest as if you received it from the bank or brokerage account:

  1. Navigate to Income > Passive Income and select Yes under the statement I earn interest.

  2. Click on the Interest tab at the top and click Yes under the question Did you receive non-U.S. interest income?

  3. Fill in the table.

Report dividends as if you received them from the bank or brokerage account:

  1. Navigate to Income > Passive Income and select Yes under the statement I earn dividends.

  2. Click on the Dividends tab at the top and click Yes under the question Did you receive non-U.S. dividends?

  3. Fill in the table.


Q: My taxes are automatically taken out of my U.K. salary, and I have a deduction taken out for the National Insurance. Do I add these for my income tax, or is it just the tax paid and no National Insurance payment?

A: National Insurance payment is not deductible from your salary. Contributions made to N.I. entirely on the U.S. tax returns. Likewise, you do not "deduct" income tax. We need to report gross salary and then take the foreign tax credit for income tax (not for the National Insurance tax). 

Another example of non-deductible taxes is VAT.


U.K. - U.S. FATCA Treaty overview

The Foreign Account Tax Compliance Act (FATCA) is a piece of legislation introduced by the United States government in 2010 to avoid double taxation and prevent fiscal evasion concerning taxes, allowing the exchange of tax-related information. The U.K. incorporated FATCA principles into its local law, obligating U.K. financial institutions to provide information on U.S. accounts to the local tax authority, H.M. Revenue and Customs (HMRC). Further, it becomes subject to the Intergovernmental Automatic Exchange of Information that took effect on July 1, 2014. Subsequently, U.K. banks reported account balances with reviews based on account value. Accounts with balances over $1 million were reviewed by June 30, 2015, and those with lower values ($50,000 - $1 million for individuals and $250,000 - $1 million for entities) by June 30, 2016.

To comply with U.S. FATCA regulations, U.K. financial institutions search their data for indications (indicia) that an account holder may be a U.S. person (U.S. Specified Persons or foreign entities in which U.S. taxpayers hold a substantial ownership interest). These indications include:

  • U.S. citizenship (evidenced by a U.S. passport or Green Card).

  • U.S. residential address.

  • Place of birth in the U.S.

  • U.S. telephone number.

  • Standing instructions to transfer funds to a U.S. bank account.

  • Power of attorney (PoA) or third-party authority in favor of a person with a U.S. address.

  • Use of a c/o or hold mail address.


U.K. financial accounts reporting

Which types of U.K. financial accounts must the U.S. individual report on FBAR / FATCA?

  • Individual bank accounts include savings accounts, checking accounts, and time deposits.

  • Retirement accounts - workplace retirement scheme, individual retirement accounts (SIPP), or QROPS.

  • Brokerage accounts, commodity futures, or options accounts.

  • Insurance policies and annuity contracts with a cash value.

  • Unit Trusts or other similar pooled funds (OEIC).

  • Business accounts where a U.S. person has a greater than 50 percent interest in the entity.


Which U.K. financial accounts are not required to be reported on FBAR / FATCA?

Even though FATCA will provide relief in reporting scope to many U.K. retirement plans considered "deemed compliant," the FATCA rules applying to individuals were not relaxed. Form 8938 requires reporting by U.S. taxpayers participating in foreign pension plans.

U.K. financial assets exempt from FBAR/FATCA reporting are limited to National Insurance, Real Estate Holding, precious metals held directly, and collectibles.

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